NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed six classes of Vornado DP LLC Trust 2010, series 2010-VNO commercial mortgage pass-through certificates. A full list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The affirmations reflect the stable performance of the underlying collateral since Fitch's last rating action. Occupancy has remained relatively stable with only a slight increase from 95% at March 2015 to 96% at year-end 2015. The portfolio's year-end (YE) 2015 net cash flow (NCF) was in-line with YE 2014, increasing 0.8%. Additionally, as of the May 2016 distribution date the pool's aggregate certificate balance has paid down approximately 11% as a result of scheduled amortization.
The pool consists of a single non-recourse mortgage loan secured by cross-collateralized and cross-defaulted first-lien mortgages or deeds of trust on fee interests in 40 retail properties. The fixed-rate component loan amortizes on a 30-year schedule. The loan is sponsored by Vornado Realty L.P. (rated 'BBB', Stable Outlook by Fitch), an affiliate of the depositor and the borrowers.
The 40 collateral properties are scattered throughout the Northeast, with considerable concentrations in New Jersey (25 properties, 72% of the allocated loan amount) and Pennsylvania (seven, 13%). The tenant base is diverse and consists primarily of national and large regional tenants, including Wal-Mart (14% of the net rentable area [NRA], rated 'AA', Stable Outlook), Lowe's (11%), and Home Depot (10%; rated 'A', Stable Outlook). Most of the leases are long-term in nature.
As part of its review, Fitch analyzed the properties' occupancies based on rent rolls dated as of year-end 2015. Across the portfolio, occupancy remained strong at 96%, compared with 97% at issuance. As of YE 2015, the Fitch adjusted debt service coverage ratio (DSCR) for the loan was 1.64x, compared with 1.41x at issuance. The DSCR was calculated based on a Fitch adjusted NCF (reflective of an additional vacancy factor, a stabilized management fee, and deductions for stabilized capital expenditures and leasing costs) and a stressed debt service amount calculated using a 9.25% refinance constant.
The Rating Outlooks remain Stable, which reflects the stable collateral performance. Classes could be subject to upgrades should performance continue to be stable or improve while amortization continues. Future downgrades are possible should there be a material decline in portfolio cash flow or occupancy.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch has affirmed the following ratings:
--$67.6 million class A-1 at 'AAAsf'; Outlook Stable;
--$304.3 million class A-2-FX at 'AAAsf'; Outlook Stable;
--$60 million class A-2-FL at 'AAAsf'; Outlook Stable;
--$38.7 million class B at 'AAsf'; Outlook Stable;
--$57 million class C at 'Asf'; Outlook Stable;
--$60 million class D at 'BBBsf'; Outlook Stable.
Additional information is available at www.fitchratings.com.
Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)
Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions (pub. 27 Aug 2015)
Exposure Draft: Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 Apr 2016)
Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
Dodd-Frank Rating Information Disclosure Form