News Column

Fitch Affirms Four Times Square Trust Commercial Mortgage P-T Ctfs 2006-4TS

June 26, 2014

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings affirms Dillon Read Capital Management Four Times Square Trust, commercial mortgage pass-through certificates, series 2006-4TS. A detailed list of rating actions follows at the end of this release.

Key Rating Drivers

The rating affirmations reflect continued stable-to-improved performance of the collateral as expected at issuance. The mortgage loan is collateralized by a long-term leasehold interest in Four Times Square, a 48-story class A office building located in Manhattan's Times Square submarket, built in 1999. The loan currently consists of a $24.9 million A-1 note, a $516.1 million A-2 note, a $25.9 million B note, and a $24.1 million C note. The A-1 note, which is currently amortizing, is not an asset of the trust and is pari passu with the A-2 note. The total outstanding mortgage debt of $591 million translates to $350 per square foot (psf). The loan has an anticipated repayment date (ARD) of December 2020, at which time the loan will have amortized down to approximately $305 psf.

Per the April 2014 rent roll, the building was 99% occupied. The two largest tenants occupy 95% of the building's 1.69 million square feet (sf) of net rentable area (NRA). Skadden, Arps, Slate, Meagher & Flom LLP occupy 49% of NRA, while Advanced Magazine Publishers Inc. (Conde Nast) occupies 46% of NRA. Also per the April 2014 rent roll, there is approximately 1,110 sf of office space vacant.

The leases for Skadden, Arps, Slate, Meagher & Flom LLP and Conde Nast expire prior to the ARD and each tenant has a springing rollover reserve two years prior to its lease expirations. The Skadden, Arps, Slate, Meagher & Flom LLP lease expires in 2020. The Conde Nast lease expires in 2019.

Conde Nast has signed a 25-year lease for office space at One World Trade Center with expected occupancy to take place in late 2014 or early 2015. According to the Port Authority of New York and New Jersey's website they have signed an agreement with The Durst Organization to market and lease a portion of Conde Nast's existing office space, which will be vacated upon their move to One World Trade Center. According to Wells Fargo, the master servicer, the borrower has not submitted any requests for lease amendments or terminations.

RATING SENSITIVITIES

The investment-grade rated classes A, B, and C are expected to remain stable. Although occupancy is expected to be impacted by the departure of Conde Nast, the property is located in a highly desirable location and average in-place rents are currently below market. Additionally, the loan was structured with a rollover reserve.

Fitch affirms the following classes and Outlooks as indicated:

--$516.1 million class A at 'AAA'; Outlook Stable;

--$25.9 million class B at 'AA+'; Outlook Stable;

--$24.1 million class C at 'AA'; Outlook Stable.

Fitch had previously withdrawn the rating of the interest-only class X.

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Sep. 20, 2013 report, ''Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions, which is available at 'www.fitchratings.com' under the following headers:

Structured Finance >> CMBS >> Criteria Reports

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (May 20, 2014);

--'Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions' (Sep. 20 2013).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821

Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=718468

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=836800

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

Primary Analyst

Lisa Cook

Director

+1 212-908-0665

Fitch Ratings, Inc.

33 Whitehall St.

New York, NY 10004

or

Committee Chairperson:

Mary MacNeill

Managing Director

+1 212-908-0785

or

Media Relations, New York

Sandro Scenga, +1 212-908-0278

sandro.scenga@fitchratings.com

Source: Fitch Ratings


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