CHICAGO--(BUSINESS WIRE)--Fitch Ratings has issued a presale report on Wells Fargo Commercial Mortgage Trust 2015-NXS1 Commercial Mortgage Pass-Through Certificates.
Fitch expects to rate the transaction and assign Rating Outlooks as follows:
--$32,424,000 class A-1 'AAAsf'; Outlook Stable;
--$164,219,000 class A-2 'AAAsf'; Outlook Stable;
--$20,791,000 class A-3 'AAAsf'; Outlook Stable;
--$155,000,000 class A-4 'AAAsf'; Outlook Stable;
--$236,966,000 class A-5 'AAAsf'; Outlook Stable;
--$59,256,000 class A-SB 'AAAsf'; Outlook Stable;
--$54,926,000c class A-S 'AAAsf'; Outlook Stable;
--$236,966,000ad class A-5FL 'AAAsf'; Outlook Stable;
--$0d class A-5FX 'AAAsf'; Outlook Stable;
--$723,582,000b class X-A; 'AAAsf'; Outlook Stable;
--$52,537,000c class B; 'AA-sf'; Outlook Stable;
--$45,373,000c class C; 'A-sf'; Outlook Stable
--$152,836,000c class PEX 'A-sf'; Outlook Stable;
--$53,732,000 class D 'BBB-sf'; Outlook Stable;
--$22,686,000bd class X-E 'BB-sf'; Outlook Stable;
--$10,746,000bd class X-F 'B-sf'; Outlook Stable;
--$22,686,000d class E 'BB-sf'; Outlook Stable;
--$10,746,000d class F 'B-'; Outlook Stable.
(a) Floating rate.
(b) Notional amount and interest-only.
(c) Class A-S, B and C certificates may be exchanged for class PEX certificates, and class PEX certificates may be exchanged for class A-S, B and C certificates.
(d) Privately placed and pursuant to Rule 144A.
The expected ratings are based on information provided by the issuer as of April 13, 2015. Fitch does not expect to rate the $151,642,000b interest-only class X-B, the $46,568,153bd interest-only class X-G, or the $46,568,153d class G certificates.
The certificates represent the beneficial ownership interest in the trust, primary assets of which are 68 loans secured by 93 commercial properties having an aggregate principal balance of approximately $955 million as of the cutoff date. The loans were contributed to the trust by Natixis Real Estate Capital LLC and Wells Fargo Bank, National Association.
Fitch reviewed a comprehensive sample of the transaction's collateral, including site inspections on 73.7% of the properties by balance, cash flow analysis of 84.5% and asset summary reviews on 84.5% of the pool.
KEY RATING DRIVERS
High Fitch Leverage: The transaction has higher leverage than other recent Fitch-rated transactions. The pool's Fitch debt service coverage ratio (DSCR) of 1.11x is below both the year-to-date 2015 average of 1.20x and the 2014 average of 1.19x. The pool's Fitch loan-to-value (LTV) of 113.6% is above both the year-to-date 2015 average of 110% and the 2014 average of 106.2%.
Single-Tenant Properties: The pool consists of 47 (36.3%) single-tenanted properties, including collateral for three of the top 10 loans - Patriots Park, Stanford Research Park and 45 Waterview Boulevard. Patriots Park (9.9%) is 97.5% occupied by the GSA (rated 'AAA') and 45 Waterview Boulevard (2.8%) is 100% occupied by DSM Nutritional Products, Inc. (parent rating of 'A-'), both on long-term leases.
Above-Average Collateral Quality: The pool's collateral exhibits above-average quality relative to other recent Fitch-rated transactions. Thirteen properties (50.8%), including nine properties collateralizing the top 10 loans, received property quality grades of 'B+' or better. Stanford Research Park (5.2%), 100 West 57th Street (3.7%) and Hotel Andra (2.5%) received property quality grades of 'A-'.
For this transaction, Fitch's net cash flow (NCF) was 12.8% below the most recent net operating income (NOI; for properties for which a recent NOI was provided, excluding properties that were stabilizing during this period). Unanticipated further declines in property-level NCF could result in higher defaults and loss severities on defaulted loans, and could result in potential rating actions on the certificates. Fitch evaluated the sensitivity of the ratings assigned to WFCM 2015-NXS1 certificates and found that the transaction displays slightly above-average sensitivity to further declines in NCF. In a scenario in which NCF declined a further 20% from Fitch's NCF, a downgrade of the junior 'AAAsf' certificates to 'A-sf' could result. In a more severe scenario, in which NCF declined a further 30% from Fitch's NCF, a downgrade of the junior 'AAAsf' certificates to 'BBB-sf' could result. The presale report includes a detailed explanation of additional stresses and sensitivities on page 13.
The master servicer will be Wells Fargo, National Association rated 'CMS1-' by Fitch. The special servicer will be Rialto Capital Advisors, LLC rated 'CSS2' by Fitch.
Additional Information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--Criteria for Analyzing Multiborrower U.S. Commercial Mortgage Transactions (June 2014)
--U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (December 2014)
--Rating Criteria for U.S. Commercial Mortgage Servicers (February 2014)
--Global Structured Finance Rating Criteria (March 2014)
--Counterparty Criteria for Structured Finance and Covered Bonds (May 2014)
Applicable Criteria and Related Research: Wells Fargo Commercial Mortgage Trust 2015-NXS1
Counterparty Criteria for Structured Finance and Covered Bonds
Global Structured Finance Rating Criteria
Rating Criteria for U.S. Commercial Mortgage Servicers
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
Criteria for Analyzing Multiborrower U.S. Commercial Mortgage Transactions