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Last week's commercial mortgage ratings actions
December 4, 2001
By MortgageDaily.com staff
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According to an announcement by Fitch, the prospect for office space in lower Manhattan is more dismal than the multifamily market over the next five years as the World Trade Center site is rebuilt. The announcement tells of a Fitch report indicating that as a result of the Sept. 11 attacks, some office buildings, multifamily housing and hotels located in lower Manhattan will experience short-term delinquencies, defaults or loan modifications. However, this will not result in a dramatic spike in commercial mortgage-backed securities (CMBS) defaults. Fitch went on to say that preliminary estimates for vacancies within multifamily housing range from 15% to 30%. Rental rates on vacant units are anywhere from 20%-40% below pre-September levels, and existing tenants have been offered concessions or rate reductions between 5%-15% if they remain in their units. A Fitch senior director said that the potential rollover in the area, combined with depressed rental rates, will result in increasing vacancies, higher insurance costs and declining operating performance. Fitch said the report identified 24 CMBS transactions where the total exposure to lower Manhattan is greater than 3% of the transaction's outstanding principal balance.
Fitch affirmed Aetna Life Insurance Co.'s `CSS2' commercial mortgage special servicer rating, reflecting Aetna's extensive experience managing and liquidating commercial mortgage loans and real estate owned (REO) assets. The rating is also based on Aetna's highly experienced asset management team, the staff's tenure with the firm, and the stability of the real estate group. Of some concern is the company's limited CMBS special servicing experience. As of 9/30/01, Aetna was named special servicer on 2 CMBS transactions, representing 39 loans, totaling $650 million. As of the same date, Aetna's portfolio of nonperforming loans and foreclosed real estate consisted of 24 assets, totaling $264 million. Fitch rates commercial mortgage primary, master, and special servicers on a scale of 1 to 4, with 1 being the highest rating.
Fitch affirmed all classes of First Union National Bank Commercial Mortgage Trust's series 2000-C1. Retail (35%) and multifamily (33%) are the largest concentration of property types. Wachovia Securities, as master servicer, provided year-end 2000 operating statements for 93% of the loans by unpaid principal balance. The weighted average debt service coverage ratio (WADSCR) for those loans has remained constant at 1.29 times (x), as it was at issuance. Of concern is the fact that 5.8% of the pool reported DSCRs less than 1.00x.
Classes of SL Commercial Mortgage Trust's commercial mortgage pass-through certificates, series 1997- C1, $8.9 million class C certificates were upgraded and affirmed by Fitch. The upgrades reflect increases in subordination levels due to amortization and prepayments, as well as strong pool performance. As of the October 2001 distribution date, the pool's certificate balance has decreased by 50% to $127.6 million from $253.7 million at closing. GMAC Commercial Mortgage Corp (GMAC), as master servicer, collected year-end (YE) 2000 financials for 68% of the loans by pool balance. The WADSCR for loans with financials was 2.18x at YE 2000, compared to 1.64x at closing. There are no delinquent or specially serviced loans.
Fitch affirmed classes of Warner Center Trust's commercial mortgage pass-through certificates, series 1995, following its review of the July 1995 transaction. The community collateralizing the certificates consists of low-rise & high-rise office/industrial buildings and a freestanding restaurant. The WADSCR is 2.41x, up from 2.19x at YE 1999, and the loan-to-value (LTV) is 40 percent. GMAC is the master servicer and collected financial information for all the properties. Fitch is concerned with the high turnover at the center and with the upcoming nonrenewal of the largest tenant.
Standard & Poor's (S&P) assigned its preliminary ratings to Credit Suisse First Boston Mortgage Securities Corp.'s (CSFB) $398.5 million commercial mortgage pass-through certificates series 2001-LCCA. The ratings reflect the value of the underlying collateral; the experience and financial stability of the sponsor and facility operators; the liquidity provided by the contingent cash reserve, the liquidity cash reserve, the servicer, and special servicer; and the terms of the loan documents, cash management agreements, interest rate cap agreement, and trust documents. The WADSCR is 1.73x, and the LTV is 64.1% on the $398.5 million A portion of the underlying notes.
S&P also assigned preliminary ratings of 'AAA' to 'BBB-' to classes CSFB's $1.27 billion commercial mortgage pass-through certificates series 2001-TFL1. The ratings reflect the credit support provided by the subordinate classes of certificates; the liquidity provided by the servicer and trustee; the economics, sponsorship, and terms of the underlying mortgage loans; and the geographic and property-type diversity of the loans. The WADSCR for the pool is 1.38x.
Classes of DLJ Mortgage Acceptance Corp.'s (DLJ) commercial mortgage pass-through certificates, series 1996- CF1 were upgraded and affirmed by Fitch. The upgrades are due to increased subordination levels and sustained strong performance of the mortgage pool. Fitch is concerned that 37.6% of the collateral is backed by retail properties and 14.2% is backed by hotel properties given the current outlook for the retail and hotel industries. The master servicer, GMAC, collected YE 2000 operating statements for 92% of the pool by collateral balance. Based on these statements, the WADSCR is 1.63x, up from 1.36x at issuance.
DLJ Commercial Mortgage Corp. commercial mortgage pass-through certificates, series 1998-CF2, had some of its classes affirmed at 'AAA' to 'B-'. The certificate principal balance is $1.06 billion as of October 2001. Significant property type concentrations include multifamily (28%), retail (21%), office (20%), and hotel (14%). Based on YE 2000 operating statements provided by the master servicer, ORIX Real Estate Capital Markets, the WADSCR for these loans is 1.65x.
Fitch affirmed $712.1 million classes of Commercial Mortgage Acceptance Corp., commercial mortgage pass-through certificates, series 1999-C1, due to the increased to stable performance of the mortgage pool. Midland Loan Services, as master servicer, collected approximately 88% of year-end 2000 operating statements by outstanding balance, or for 207 of 241 remaining loans. The WADSCR for those loans was 1.66x at year-end compared to 1.51x at issuance.
Classes of GE Capital Commercial Mortgage Corp., Series 2001-3 commercial mortgage pass-through certificates were rated at 'AAA' to 'B-' by Fitch. The certificates represent beneficial ownership interest in the trust, primary assets of which are 133 fixed rate loans on 140 multifamily and commercial properties having an aggregate principal balance of approximately $963.8 million, as of the cutoff date.
S&P assigned preliminary ratings of 'AAA' to 'B-' to classes of First Union National Bank Commercial Mortgage Trust's $958.648 million commercial mortgage pass-through certificates series 2001-C4, reflecting the credit support provided by the subordinate classes of certificates, the liquidity provided by the master servicer and the trustee, the economics of the underlying mortgage loans, and the property-type diversity of the loans. The WADSCR is 1.28x, the beginning LTV is 91.1%, and the ending LTV is 77.3%.
S&P assigned its preliminary ratings to GMAC Commercial Mortgage Securities Inc.'s $716.3 million mortgage pass-through certificates series 2001-C3, reflecting the credit support provided by the subordinate classes of certificates, the liquidity provided by the servicer and trustee, the economics of the underlying loans, and the geographic and property-type diversity of the loans. The WADSCR is 1.32x, the beginning LTV is 91.8%, and the ending LTV is 80.4%.