News Column

Fitch Upgrades 5 Classes of BACM 2003-2

July 18, 2014

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has upgraded five classes and affirmed four classes of Banc of America Commercial Mortgage Inc. (BACM) commercial mortgage pass-through certificates series 2003-2. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrades are due to significant defeasance and high credit enhancement as well as the expected continued delivering of the transaction in the near future.

As of the July 2014 distribution date the pool's aggregate principal balance has been reduced by 94% to $102.8 million from $1.77 billion at issuance. Of the original 152 loans in the pool, nine remain. Of the remaining loans, five are defeased (66.2%), two are performing (29.9%) and two are in special servicing (3.9%). Interest shortfalls are currently affecting classes L through P.

The two performing loans mature in 2015 (24.3%) and 2018 (5.6%). The defeased loans mature in 2015 (14.1%) and 2018 (52.1%).

The largest non-defeased loan (24.3%) is Gravois Bluffs, a 372,759 square foot (sf) retail center in Fenton, MO, in the St. Louis MSA. The center is anchored by Wal-Mart Supercenter on a ground lease (44% NRA, expires 2021), Big Lots (10% NRA, expires 2021) and Garden Ridge (32%, expires 2016). Given the stable performance of the asset as well as the long-term leases on the anchor tenants, refinance at loan maturity in May 2015 is likely. Through year-end 2013, the property reported a debt service coverage ratio (DSCR) of 1.29x and 100% occupancy.

The largest specially serviced asset is Rustic Pines (2%), a 131-unit manufactured housing community located in Thompson, OH. The loan was transferred to special servicing after maturity default in October 2013. Per the special servicer commentary, the Borrower declined refinancing terms and has proposed a deed-in-lieu of foreclosure. The special servicer is proceeding with foreclosure. Through year-end 2013, the property reported a DSCR of 1.15x and 71% occupancy.

The second specially serviced asset is Harbor Place Professional Center (1.8%) a 19,600 sf office property, built in 2001, located in Punta Gorda, FL. The loan was transferred to special servicing after maturity default in June 2013. The borrower consented to a foreclosure, and the trust took title to the property on April 10, 2014. The special servicer attempting to stabilize the property while listing it for sale.

RATING SENSITIVITY

Rating Outlooks on classes F and G remain Stable due to increased credit enhancement, significant paydown from defeased loans and declining risk of loan defaults. The Rating Outlook on class H is revised to Stable from Negative due to increased credit enhancement, significant paydown from defeased loans, and low risk of additional loan defaults. Class J and class K are assigned Stable Outlooks.

Fitch upgrades the following classes and assigns or revises Rating Outlooks as indicated:

--$21 million class F to 'AAAsf' from 'Asf', Outlook Stable;

--$23.1 million class G to 'AAsf' from 'BBsf', Outlook Stable;

--$21 million class H to 'BBBsf' from 'Bsf', Outlook Stable;

--$18.9 million class J to 'BBsf' from 'CCCsf', Outlook Stable assigned;

--$10.5 million class K to 'Bsf' from 'Csf', Outlook Stable assigned.

Fitch affirms the following class and revises the RE as indicated:

--$8.5 million class L at 'Dsf', RE 50%.

Fitch affirms the following classes:

--$0 class M at 'Dsf', RE 0%;

--$0 class N at 'Dsf', RE 0%;

--$0 class O at 'Dsf', RE 0%.

The class A-1, A-1A, A-2, A-3, A-4, B, C, D, E, BW Rakes certificates have paid in full. Fitch does not rate the class P and HS Rake certificates.

Fitch previously withdrew the ratings on the interest-only class XC and XP 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 'www.fitchratings.com' under the following headers:

Structured Finance then CMBS then Criteria Reports

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

Applicable Criteria and Related Research:

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

--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 11, 2013).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

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

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

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

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=840490

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

Valerie Jayson, +1 312-368-3116

Associate Director

Fitch Ratings, Inc.

70 West Madison Street

Chicago, IL 60602

or

Committee Chairperson

Mary MacNeill, +1 212-908-0785

Managing Director

or

Media Relations:

Sandro Scenga, +1 212-908-0278

sandro.scenga@fitchratings.com

Source: Fitch Ratings


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