Fitch Affirms MSBAM 2012-C5

NEW YORK--()--Fitch Ratings has affirmed all 14 classes of Morgan Stanley Bank of America Merrill Lynch Trust (MSBAM) commercial mortgage pass-through certificates, series 2012-C5. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations are based off of the overall stable performance of the pool's underlying collateral since issuance. As of the March 2016 distribution date, the pool's aggregate principal balance has been reduced by 8% to $1.25 billion from $1.35 billion at issuance. Per the servicer reporting, four loans (6.8% of the pool) are defeased. Fitch has not designated any loans as Fitch Loans of Concern, and no loans are in special servicing. Interest shortfalls are currently affecting class J.

Fitch modeled losses of 2.8% of the remaining pool; expected losses on the original pool balance total 2.5%. The pool has experienced no realized losses to date. In Fitch's analysis, the deterministic stress scenario was used. In addition, there was one variance from criteria related to class D current credit enhancement, for which the model output suggested that an upgrade was possible. Fitch, however, determined that an upgrade was not warranted at this time as there have been no material changes to the performance of the pool since issuance and no significant increase in credit enhancement.

The largest loan in the pool is the Legg Mason Tower loan (13.9%), secured by a 24-story office building located in Baltimore, MD. The subject is part of a larger mixed-use development known as Harbor East. Per servicer reporting, the November 2015 YTD net operating income (NOI) debt service coverage ratio (DSCR) decreased to 1.44x from 1.87x as of year-end (YE) 2014. The decrease was attributed to both an increase in the debt service, as a result of the interest-only period of the loan term ending, and a slight rise in operating expenses. As of the November 2015 rent roll, the subject was 97% occupied. Several media outlets have reported that the property is currently being marketed for sale.

The next largest loan is the Silver Sands Factory Stores loan (8%), secured by a 442,126 square foot (sf) retail outlet center located in Destin, FL. Tenants at the property include Saks Fifth Avenue Off 5th (7% of NRA), Polo Ralph Lauren (4%), and Columbia Sportswear (3%). The rent roll is extremely granular with no tenant occupying more than 10% of NRA. According to the September 2015 rent roll, the property was 97% occupied. Per servicer reporting, the September 2015 YTD NOI DSCR was 4.80x.

The third largest loan is the U.S. Bank Tower loan (6.8%), secured by a 26-story, 520,277 sf office property located in Denver, CO. The rent roll at the property is a diverse mix that includes tenants in the financial services, government, and legal sectors, as well as major retailers on the ground level. Occupancy at the property increased slightly to 83% as of September 2015 from 81% as of December 2014. U.S. Bank, the subject's largest tenant (28% of NRA), has a lease expiring in December 2016. The loan was structured with an up-front leasing reserve of $1.2 million and annual instalments of $74,563 and includes a provision that stipulates a cash sweep will occur if U.S. Bank does not provide notice of lease renewal by January 2016. The Master Servicer has confirmed that U.S Bank has not indicated their intention to renew or vacate their space at the subject and the cash sweep has been put in place. Fitch will continue to monitor the loan for leasing updates and for any deterioration in performance.

RATING SENSITIVITIES

The Rating Outlooks on all classes remain Stable. Fitch does not foresee positive or negative ratings migration until a material economic or asset level event changes the transaction's overall 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 as indicated:

--$200 million class A-2 at 'AAAsf'; Outlook Stable;

--$149.6 million class A-3 at 'AAAsf'; Outlook Stable;

--$489.8 million class A-4 at 'AAAsf'; Outlook Stable;

--$59.2 million class A-S at 'AAAsf'; Outlook Stable;

--$957.8 million* class X-A at 'AAAsf'; Outlook Stable;

--$33 million class B at 'AAsf'; Outlook Stable;

--$65.9 million class X-B at 'AAsf'; Outlook Stable;

--$116.7 million class PST at 'Asf'; Outlook Stable;

--$24.5 million class C at 'Asf'; Outlook Stable;

--$27.1 million class D at 'BBB+sf'; Outlook Stable;

--$49.1 million class E at 'BBB-sf'; Outlook Stable;

--$8.5 million class F at 'BBB-sf'; Outlook Stable;

--$18.6 million class G at 'BB+sf'; Outlook Stable;

--$23.7 million class H at 'Bsf'; Outlook Stable.

*Notional and interest-only.

The class A-1 certificates have paid in full. Fitch does not rate the class J and X-C certificates.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 28 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748781

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1002587

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1002587

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Contacts

Fitch Ratings
Primary Analyst
Zachary Johnson
Associate Director
+1-646-582-4815
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Britt Johnson
Senior Director
+1-312-606-2341
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Zachary Johnson
Associate Director
+1-646-582-4815
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Britt Johnson
Senior Director
+1-312-606-2341
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com