News Column

Fitch Upgrades 1 Class of MCF 1998-MC2

February 24, 2014

Fitch Ratings has upgraded one class and affirmed one class of Mortgage Capital Funding, Inc.'s (MCF) commercial mortgage pass- through certificates series 1998-MC2.

KEY RATING DRIVERS

The upgrade is due to increasing credit enhancement and stable performance of the remaining pool. Fitch modeled losses of 3.4 percent of the remaining pool; expected losses on the original pool balance total 1.6 percent, including $15.2 million (1.5 percent of the original pool balance) in realized losses to date. Fitch has designated 13 loans (60.6 percent) as Fitch Loans of Concern, which does not include any specially serviced loans.

As of the January 2014 distribution date, the pool's aggregate principal balance has been reduced by 97.6 percent to $23.8 million from $1.01 billion at issuance. Interest shortfalls are currently affecting class L.

Eleven of the loans within the pool have the same sponsor and are located in Columbus, OH. The loans are cross-defaulted and cross- collateralized and secured by various property types: retail (ten loans), multifamily (one loan) and office (one loan). All the loans have a maturity date of March 1, 2018.

The largest contributor to expected losses is a 71 unit nursing and convalescent home in Pasadena, CA. (2.2 percent of the pool). The debt service coverage ratio (DSCR) has been below 1.0x for several years, with most recently reported negative cash flow due to high operating expenses and decreased income. The loan has remained current.

RATING SENSITIVITY

The Rating Outlook on class J remains Stable due to increasing credit enhancement and continued paydown.

Fitch upgrades the following class as indicated:

--$13.7 million class J to 'BBsf' from 'B+sf'; Outlook Stable

Fitch affirms the following class but revises RE as indicated:

--$7.6 million class K at 'CCCsf', RE 100 percent.

The class A-1, A-2 and B through H certificates have paid in full. Fitch does not rate the class L certificates. Fitch previously withdrew the rating on the interest-only class X 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 'fitchratings.com' under the following headers:

Structured Finance then CMBS then Criteria Reports

Additional information is available at '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. 18, 2012).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://fitchratings.com/creditdesk/reports/ report_frame.cfm?rpt_id=708661

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

http://fitchratings.com/creditdesk/reports/ report_frame.cfm?rpt_id=724961

Additional Disclosure

Solicitation Status

http://fitchratings.com/gws/en/disclosure/ solicitation?pr_id=821039

((Comments on this story may be sent to newsdesk@closeupmedia.com))


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