Fitch to Rate IMSCI Commercial Mortgage Pass-Through Certificates, Series 2013-4; Presale Issued
CHICAGO--(BUSINESS WIRE)--Fitch Ratings has issued a presale report on the Institutional Mortgage Capital LP's commercial mortgage pass-through certificates, series 2013-4.
Fitch expects to rate the transaction and assign Outlooks as follows:
--$205,005,000 class A-1 'AAAsf'; Outlook Stable;
--$80,000,000 class A-2 'AAAsf'; Outlook Stable;
--$6,609,000 class B 'AAsf'; Outlook Stable;
--$11,152,000 class C 'Asf'; Outlook Stable;
--$9,087,000 class D 'BBBsf'; Outlook Stable;
--$4,957,000 class E 'BBB-sf'; Outlook Stable;
--$3,717,000 class F 'BBsf'; Outlook Stable;
--$3,304,000 class G 'Bsf'; Outlook Stable.
All currencies are in Canadian dollars (CAD).
The expected ratings are based on information provided by the issuer as of Nov. 15, 2013. Fitch does not expect to rate the $330,441,429 (notional balance) interest-only class X or the non-offered $6,610,429 class H certificate.
The certificates represent the beneficial ownership in the trust, primary assets of which are 33 loans secured by 37 commercial properties having an aggregate principal balance of approximately $330.4 million as of the cutoff date. The loans were originated by Institutional Mortgage Capital, LP.
Fitch reviewed a comprehensive sample of the transaction's collateral, including site inspections on 86.5% of the properties by balance, cash flow analysis of 100%, and asset summary reviews on 100% of the pool.
The transaction has a Fitch stressed debt service coverage ratio (DSCR) of 1.16x, a Fitch stressed loan-to-value (LTV) of 100.2%, and a Fitch debt yield of 9.3%. Fitch's aggregate net cash flow represents a variance of 5.4% to issuer cash flows.
KEY RATING DRIVERS
Canadian Loan Attributes and Historical Performance: The ratings reflect strong historical Canadian commercial real estate loan performance, including a low delinquency rate and low historical losses of less than 0.1%, as well as positive loan attributes, including short amortization schedules and recourse to the borrower and additional guarantors. For further information on prior Canadian CMBS securitizations, see 'Canadian CMBS Default and Loss Study,' dated October 2013.
Fitch Leverage: The pool has a Fitch DSCR and LTV of 1.16x and 100.2%, respectively, which represents similar leverage to the IMSCI 2013-3 deal, which had a Fitch DSCR and LTV of 1.15x and 99.5%, respectively. Although higher levered compared to U.S. deals in the first half of 2013, this is mitigated by lack of interest-only loans and amortization.
Property Type Mix: The pool contains 22.8% of loans secured by multifamily properties, higher than the prior IMC securitization and recent U.S. conduit transactions. Multifamily properties have experienced lower volatility than other property types and have a below-average likelihood of default in Fitch's analysis. In addition, there are no healthcare/retirement properties and a lower percentage of hotels than recent U.S. conduit transactions.
Amortization: The pool has a weighted average amortization term of 26 years, which represents faster amortization than U.S. conduit loans. There are no partial or full interest-only loans. The pool's maturity balance represents a paydown of 18.9% of the closing balance.
Fitch performed two model-based break-even analyses to determine the level of cash flow and value deterioration the pool could withstand prior to $1 of loss being experienced by the 'BBB-sf' and 'AAAsf' rated classes. Fitch found that the IMSCI 2013-4 pool could withstand a 43.8% decline in value (based on appraised values at issuance) and an approximately 19.3% decrease to the most recent actual cash flow prior to experiencing a $1 of loss to the 'BBB-sf' rated class. Additionally, Fitch found that the pool could withstand a 49.4% decline in value and an approximately 27.4% decrease in the most recent actual cash flow prior to experiencing $1 of loss to any 'AAAsf' rated class.
Key Rating Drivers and Rating Sensitivities are further described in the accompanying pre-sale report.
The master and special servicer will be Midland Loan Services, a Division of PNC Bank, National Association, rated 'CMS1' and 'CSS1', respectively, by Fitch.
The presale report is available at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--Criteria for Analyzing Multiborrower U.S. Commercial Mortgage Transactions (August 2013)
--Global Structured Finance Rating Criteria (May 2013)
--U.S. Commercial Mortgage Servicer Rating Criteria (February 2011)
--U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (December 2012)
--Counterparty Criteria for Structured Finance Transactions and Covered Bonds (May 2013)
Applicable Criteria and Related Research: IMSCI 2013-4
Criteria for Analyzing Multiborrower U.S. Commercial Mortgage Transactions
Global Structured Finance Rating Criteria
U.S. Commercial Mortgage Servicer Rating Criteria
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
Counterparty Criteria for Structured Finance and Covered Bonds