OREANDA-NEWS. Fitch Ratings has upgraded five classes and affirmed six classes of Banc of America Commercial Mortgage Inc. (BACM 2004-1) commercial mortgage pass-through certificates series 2004-1. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrades reflect an increase in credit enhancement as a result of paydowns, defeasance and stable performance of the underlying collateral. Fitch modeled losses of 11.1% of the remaining pool; expected losses on the original pool balance total 4.4%, including \$50.6 million (3.8% of the original pool balance) in realized losses to date. Fitch has designated two loans (11.8%) as Fitch Loans of Concern, which includes one specially serviced asset (10.1%).

As of the December 2014 distribution date, the pool's aggregate principal balance has been reduced by 94.5% to \$73.4 million from \$1.33 billion at issuance. According to the servicer, five loans (41% of the pool) have defeased and will be reflected in next month's reporting. Interest shortfalls are currently affecting classes H through K.

The largest contributor to expected losses is a 74,031 square foot (sf) office property (10.1% of the pool) located in Federal Way, WA. The asset is real estate owned (REO) as of November 2013. Occupancy declined to 45% as of December 2014 with several tenants recently vacating upon lease expiration. The property faces continued leasing challenges with 17% of leases scheduled to expire in 2015 coupled with limited leasing activity reported by the servicer. According to Reis, the vacancy rate for office properties in the Renton/Kent/Southend submarket of Seattle was 14.2% with average asking rents of \$21.50 psf compared to \$22.92 psf average in-place rents for the subject property.

RATING SENSITIVITY

Rating Outlooks on the remaining classes remain Stable due to defeasance and paydown contributing to increased credit enhancement of the classes. Fitch performed additional stresses when considering upgrades. Although credit enhancement remains high relative to the rating category, further upgrades were limited given the concentrated nature of the pool and high lease expiration exposure in the year of loan maturity for the largest loan in the pool. The Distressed classes (those rated below 'B') may be subject to further downgrades as additional losses are realized.

Fitch upgrades the following classes and assigns REs as indicated:

--\$2.8 million class D to 'AAAsf' from 'Asf'; Outlook Stable;
--\$13.3 million class E to 'AAAsf' from 'BBBsf'; Outlook Stable;
--\$18.2 million class F to 'Asf' from 'BBsf'; Outlook Stable;
--\$11.6 million class G to 'BBsf' from 'Bsf'; Outlook Stable;
--\$19.9 million class H to 'CCCsf' from 'CCsf'; RE 100%.

Fitch affirms the following classes:

--\$6.6 million class J at 'Csf'; RE 5%.
--\$844,953 class K at 'Dsf'; RE 0%;
--\$0 class L at 'Dsf'; RE 0%;
--\$0 class M at 'Dsf'; RE 0%;
--\$0 class N at 'Dsf'; RE 0%;
--\$0 class O at 'Dsf'; RE 0%.

Classes A-1, A-1A, A-2, A-3, A-4, B, C and XP certificates have paid in full. Fitch does not rate the class P certificates. Fitch previously withdrew the rating on the interest-only class XC certificate.