Fitch Affirms Merrill Lynch 2004-BPC1
NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed 16 classes of Merrill Lynch Mortgage Trust commercial mortgage pass-through certificates, series 2004-BPC1. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The affirmations are warranted due to the relatively stable performance of the pool since Fitch's last rating action. Fitch modeled losses of 10.8% of the remaining pool; expected losses on the original pool balance total 9.1%, including $52.7 million (4.2% of the original pool balance) in realized losses to date. Fitch has designated 20 loans (36.6%) as Fitch Loans of Concern, which includes seven specially serviced assets (10.6%).
As of the January 2014 distribution date, the pool's aggregate principal balance has been reduced by 55.1% to $558.5 million from $1.24 billion at issuance. Per the servicer reporting, seven loans (18.3% of the pool) are defeased. Interest shortfalls are currently affecting classes F through Q.
The largest contributor to expected losses is the specially-serviced Simon - Washington Square Mall (4.9% of the pool), which is secured by a 448,762 sf portion of a regional mall totaling 922,614 sf located in Indianapolis, IN. The loan transferred to the special servicer in December 2013 for imminent default; the loan was previously modified and returned to the master servicer in March 2011. The modification terms included a split into a $15 million A-Note and $12.5 million B-Note, an equity contribution from the borrower to fund additional reserves, paydown of one million of the outstanding balance, and a maturity extension to July 1, 2016. The December 2012 NOI DSCR was 1.44x, as of the March 2013 rent roll overall mall occupancy was 80% with collateral occupancy of approximately 62%. Fitch expects losses on the loan as current performance of the property does not support the refinance of both the A and B notes.
The next largest contributor to expected losses is a specially-serviced loan (3.1%), which is secured by a 276 unit multifamily property built in 2002 located in Fort Myers, Florida. The loan was transferred to the special servicer in November 2010 due to payment default. The Borrower continues to remit rents per the Sequestration of Rents Order in place. The servicer-reported November 2013 trailing 12 month (TTM) DSCR is 1.02 (x) times and the occupancy is 89%.
The third largest contributor to expected losses is a 700 bed student housing property located within two miles of Florida State University in Tallahassee, Florida (3.8%). Occupancy as of the September 2013 rent roll was 89% which increased from 87% at year-end (YE) 2012. Although occupancy has increased slightly there has been a decrease in base rent since 2011. The DSCR as of third quarter 2013 was 0.91x and declined from 0.97x as of YE 2012.
Rating Outlooks on classes A-1A and A-5 remain stable due to increasing credit enhancement and continued paydown. Rating Outlooks on classes AJ and B have been revised to Stable from Negative due to continued paydown and the likelihood of continued paydown from the 2014 loan maturities. The Rating Outlook on Class C will remain Negative and may be subject to downgrade if there is further deterioration of the pool's cashflow performance and/or decrease in the value of specially serviced loans. Additional downgrades to the distressed classes (those rated below 'B') are expected as losses are realized on specially serviced loans.
Fitch affirms the following classes and revises Rating Outlooks as indicated:
--$76.1 million class A-1A at 'AAAsf', Outlook Stable;
--$286.5 million class A-5 at 'AAAsf', Outlook Stable;
--$94.8 million class AJ at 'AAsf', Outlook to Stable from Negative;
--$26.4 million class B at 'BBB-sf', Outlook to Stable from Negative;
--$12.4 million class C at 'BBsf', Outlook Negative;
--$18.6 million class D at 'CCCsf', RE 65%;
--$9.3 million class E at 'CCsf', RE 0%;
--$15.5 million class F at 'CCsf', RE 0%;
--$10.9 million class G at 'Csf', RE 0%;
--$7.9 million class H at 'Dsf', RE 0%;
--$0 class J at 'Dsf', RE 0%;
--$0 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 P at 'Dsf', RE 0%.
The class A-1, A-2, A-3, and A-4 certificates have paid in full. Fitch does not rate the class Q certificates. Fitch previously withdrew the ratings on the interest-only class XC and XP certificates.
Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 11, 2013 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at 'www.fitchratings.com' under the following headers:
Structured Finance >> CMBS >> Criteria Reports
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 24, 2013);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 11, 2013).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria