CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed nine classes of Banc of America Commercial Mortgage Inc. (BACM 2004-1) commercial mortgage pass-through certificates series 2004-1. A detailed list of rating actions follows at the end of this release.
KEY RATING DRIVERS
The affirmations reflect the stable performance of the pool since Fitch's last rating action, including the loss expectation on the asset in special servicing that is relatively in-line with previous expectations. As of the October 2016 distribution date, the pool's aggregate principal balance has been reduced by 96.9% to $41.2 million from $1.33 billion at issuance. One loan (1.3% of the pool) is defeased and one loan is specially serviced (18% of the pool). Interest shortfalls are currently affecting classes H through K.
Stable Collateral: Since the last review there has been little change in performance metrics of the remaining loans in the pool. No loans have defeased, liquidated, or paid off and expected losses remain relatively stable.
Pool Concentration: The pool is highly concentrated with only four non-defeased loans remaining. The largest non-defeased loan, Mercantile East Shopping Center (68.4%), has demonstrated generally stable performance. However, the property's largest anchor tenant, Kohl's, closed its store in June of 2016. The tenant continues to pay rent and has a lease expiration in January 2024 with no early termination options. Several other tenants at the property have recently renewed their leases including Staples (5.7% of NRA) and Bank of America (2% NRA). The property had a YE 2015 DSCR of 2.01x and occupancy of 96.4%. The loan continues to perform, but given Kohl's store closure, the servicer has placed the loan on its watchlist.
REO Loan: The second largest asset in the pool, Federal Way Office Center, is currently real estate owned (REO) and remains in special servicing. The property has been REO since November, 2013. Since becoming REO, property occupancy has declined from 72% to 36.2% as of June, 2016. Year-end (YE) 2015 DSCR was 0.19x and March 2016 YTD DSCR was negative. The servicer continues stabilization efforts before marketing the property for sale.
The Rating Outlooks on classes F and G remain Stable. Downgrades are possible should performance at the Mercantile East Shopping Center decline or if losses on the Federal Way Office Center are higher than expected. Conversely, upgrades are possible in the event of substantial paydown, lower than expected losses and/or stabilization of the dark anchor at the Mercantile East Shopping Center.
USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10
No third-party due diligence was provided or reviewed in relation to this rating action.
Fitch has affirmed the following classes:
--$2.3 million class F at 'AAAsf'; Outlook Stable;
--$11.6 million class G at 'BBsf'; Outlook Stable;
--$19.9 million class H at 'CCCsf'; RE 100%.
--$6.6 million class J at 'Csf'; RE 25%.
--$738,775 class K at 'Dsf'; RE 0%;
--$0 class L at 'Dsf'; RE 0%;
--$0 class M at 'Dsf'; RE 0%;
--$0 class N at 'Dsf'; RE 0%;
--$0 class O at 'Dsf'; RE 0%.
Classes A-1, A-1A, A-2, A-3, A-4, B, C, D, E and XP certificates have paid in full. Fitch does not rate the class P certificates. Fitch previously withdrew the rating on the interest-only class XC certificate.
Additional information is available at 'www.fitchratings.com'.
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