CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed 12 classes of Wells Fargo Bank, N.A. (WFRBS) commercial mortgage pass-through certificates series 2011-C4. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The affirmations reflect stable performance of the underlying collateral pool. Fitch modeled losses of 2.9% of the remaining pool; expected losses on the original pool balance total 2.5%. The pool has experienced no realized losses to date. Fitch has designated four loans (2.8%) as Fitch Loans of Concern, which includes one specially serviced asset (0.8%). There is a significant retail exposure within the pool as 46.4% of the loans are secured by retail properties.
As of the March 2016 distribution date, the pool's aggregate principal balance has been reduced by 14.6% to $1.26 billion from $1.48 billion at issuance. Per the servicer reporting, three loans (9.8% of the pool) are defeased. Interest shortfalls are currently affecting class H.
The largest contributor to expected losses is secured by a 423,556 square foot (sf; 235,656 sf is collateral) shopping mall located in Wausau, WI (1.4% of the pool). The mall is anchored by Younkers and Sears. JC Penney's (JCP), which is the only anchor space that is part of the collateral, vacated in May 2014 and lease payments ceased upon the August 2014 lease expiration. According to media reports, the loan's sponsor, CBL & Associates Properties, Inc., is attempting to move Younker's into the former JCP space. While the loan remains current and a replacement tenant for the JCP space may be finalized soon, Fitch's stressed analysis assumed the anchor space remained vacant. As of year-end (YE) 2015, the property occupancy was 61%, down from 94% at issuance. The debt service coverage ratio (DSCR) decreased to 0.90x for YE 2015 from 1.64x at issuance.
The next largest contributor to expected losses is the specially-serviced asset (0.8%). It is secured by a 252-unit student housing property located in Fredonia, NY and adjacent to the State University of New York at Fredonia. The loan transferred to the special servicer in November 2014 due to a borrower hardship letter indicating imminent default. The loan has, however, remained current. The servicer is in the process of gathering property information to determine a resolution. According to the October 2015 rent roll, the property is 92% occupied.
The largest loan in the pool (12%) is secured by a 1.2 million sf (648,728 sf is collateral) regional mall located in Appleton, WI. The mall, which is the second largest in WI, is anchored by JC Penney, Sears, Target, Macy's, Younkers and Scheel's. Scheel's is the only anchor that is part of the collateral. The servicer reported DSCR was 2.06x as of September 2015 compared to 2.11x as of YE 2013 and 1.91x at issuance. Occupancy as of YE 2015 was 97% compared to 96% for YE 2013 and 92% at issuance.
Rating Outlooks on classes A2 through G remain Stable due to increasing credit enhancement, continued paydown, and overall stable collateral performance. Fitch does not foresee positive or negative ratings migration unless a material economic or asset level event changes the underlying transaction's portfolio-level metrics.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch affirms the following classes:
--$78.2 million class A-2 at 'AAAsf'; Outlook Stable;
--$164.9 million class A-3 at 'AAAsf'; Outlook Stable;
--$90 million class A-FL at 'AAAsf'; Outlook Stable;
--$0 class A-FX at 'AAAsf'; Outlook Stable;
--$681.4 million class A-4 at 'AAAsf'; Outlook Stable;
--Interest-only class X-A at 'AAAsf'; Outlook Stable;
--$42.6 million class B at 'AAsf'; Outlook Stable;
--$42.6 million class C at 'A+sf'; Outlook Stable;
--$33.3 million class D at 'A-sf'; Outlook Stable;
--$51.8 million class E at 'BBB-sf'; Outlook Stable;
--$20.4 million class F at 'BBsf'; Outlook Stable;
--$18.5 million class G at 'Bsf'; Outlook Stable.
The class A-1 certificates have paid in full. Fitch does not rate the class H or 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