CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed nine classes of Wells Fargo Bank, N.A. (WFRBS) Commercial Mortgage Trust 2011-C2, commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The affirmations are the result of stable performance of the underlying collateral since issuance. There is one loan in Special Servicing (1.0% of the pool) with no loans exhibiting historical delinquency. The current weighted-average debt service coverage ratio (DSCR) and loan-to-value (LTV) are 1.84x and 63.7%, respectively. In comparison, the weighted-average DSCR and LTV at issuance were 1.62x and 62.6%, respectively.
Fitch has revised the Rating Outlook on classes B, C, and D to Positive from Stable as a result of increased credit enhancement from substantial payoff and defeasance, as well as strong loan-level credit metrics. Additionally, the expected payoff of the largest loan in the pool, Hollywood and Highland, will increase geographic and property type diversity and reduce the overall volatility of the pool.
As of the November 2015 distribution date, the pool's aggregate principal balance has been reduced by 20.7% to $1.0 billion from $1.3 billion at issuance. Per the servicer, five loans (8.4% of the pool) are defeased. Interest shortfalls are currently affecting class G due to special servicing fees.
The specially serviced loan (1.0% of the pool) is secured by two office buildings with an aggregate 85,910 square feet (sf) of space located in Reston, VA. The property experienced significant rollover in 2012 when three tenants comprising 40.5% of the net rentable area (NRA) vacated. As a result, the DSCR declined to 0.41x by year-end 2014. However, the borrower continued to make all payments as agreed. Further, DSCR climbed to 1.02x by February 2015, as the vacant spaces were leased. The special servicer reports the economic occupancy was 86.7% as of July 2015 and indicated that net operating income (NOI) should increase as tenants occupy their spaces and rent abatements expire.
The largest loan (15.2% of the pool), Hollywood & Highland, is secured by a 458,686 sf landmark retail and entertainment center located in Los Angeles, CA. The property is anchored by Dolby Theater (formerly known as the Kodak Theater) and includes a grand ballroom, restaurants, night clubs and a bowling alley. Despite decreased performance in 2012 related to a Cirque du Soleil performance agreement cancellation, the property has continued to perform. The property has since fully recovered and reflects a year-end 2014 DSCR of 1.87x with corresponding occupancy of 97%. The loan is currently on the Servicer Watch List as it matures in January of 2016. Per the Master Servicer, the borrower intends to refinance the property and pay the loan in full at or prior to maturity.
The Positive Outlooks on classes B, C, and D indicate the potential for upgrade if maturing loans pay off, leading to increased credit enhancement to these classes. The Ratings Outlook for all other classes remain Stable, as Fitch does not foresee positive or negative ratings migration until a material economic or asset level event changes the transaction's overall portfolio-level metrics. Additional information on rating sensitivity is available in the report 'WF-RBS Commercial Mortgage trust 2011-C2' (Sept. 2, 2011), available at www.fitchratings.com.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch has taken the following rating actions:
Fitch affirms the following classes with revised Outlooks:
--$39 million class B at 'AAsf'; Outlook to Positive from Stable;
--$43.9 million class C at 'Asf'; Outlook to Positive from Stable;
--$68.2 million class D at 'BBB-sf'; Outlook to Positive from Stable;
Fitch affirms the following classes:
--$192.3 million class A-2 at 'AAAsf'; Outlook Stable;
--$122.4 million class A-3 at 'AAAsf'; Outlook Stable;
--$493.2 million class A-4 at 'AAAsf'; Outlook Stable;
--$807.9 million* class X-A at 'AAAsf'; Outlook stable.
--$21.1 million class E at 'BBsf'; Outlook Stable;
--$14.6 million class F at 'Bsf'; Outlook Stable;
*Notional amount and interest-only.
Class A-1 has paid in full. Fitch does not rate the class G and X-B certificates.
Additional information is available at 'www.fitchratings.com'.
Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)
Dodd-Frank Rating Information Disclosure Form