Fitch Upgrades Two Classes of Commercial Capital Access One, Series 3
KEY RATING DRIVERS
The affirmations are due to stable performance and continued paydown since the last rating action. The pool has experienced \\$32 million (7.4% of the original pool balance) in realized losses to date. There are 18 loans remaining in the pool; Fitch has identified four Loans of Concern (40.5% of the pool), which includes 200 Wheeler Road, the largest loan in the transaction (29.1%). As of the last rating action, Denver Merchandise Mart was the only specially serviced asset. The asset has since liquidated with better than expected recoveries; however, the concentration of Fitch Loans of Concern remains high.
As of the June 2015 distribution date, the pool's aggregate principal balance has been reduced by 90% to \\$43.5 million from \\$433.7 million at issuance. Of the remaining pool, four loans (17.1% of the pool) are multifamily properties that had low-income housing tax credits at issuance. All of them are now past their compliance periods. Additionally, four loans (17.1% in the pool) are covered by a SunAmerica limited guaranty. SunAmerica's parent company, AIG, is rated 'A-' with a Positive Outlook by Fitch. The guaranty requires Sun America to either pay the special servicer an amount equal to any realized losses arising from covered specially serviced loans, or to purchase the covered loans directly from the trust at par if they become distressed.
The largest loan in the pool (29.1% of the pool) is secured by a 250,428 square foot (sf) office property located in Burlington, MA (Boston MSA). As of the last rating action, Aspen Technologies was expected to vacate their 75,000 sf corporate headquarters for a larger space in Bedford, MA. Ultimately, the move-out occurred in January 2015, which resulted in a decline in occupancy from 89% as of year-end (YE) 2014 to the current occupancy of 59%. NOI DSCR was 1.26x as of YE 2014. To date, updated leasing status for the vacant space has not been received. Fitch took the drop in occupancy into account in its analysis and will continue to monitor the leasing status of the property. The loan remains current.
The largest contributor to expected losses (3.1% of the pool) is a loan secured by a 38,242 sf office building built in 1998 and located in Midvale, UT (Salt Lake City MSA). The loan has been identified as a Fitch Loan of Concern and is on the master servicer's watch list due to low DSCR. The subject is 32.7% occupied by two tenants as of the June 2015 rent roll and the NOI DSCR is 0.21x as of YE 2014. A prospective tenant has expressed interest in signing a lease for the majority of the vacant space; however, confirmation regarding a signed lease has not been received. The loan remains current.
RATING SENSITIVITIES
The ratings of classes 3C, 3D, and 3E are expected to remain stable due to increasing credit enhancement. Despite high credit enhancement, upgrades are not expected on class 3E due to the concentrated pool and credit characteristics of the remaining collateral, including the uncertainty in the leasing status of the largest loan (29.1% of the pool) and binary risk associated with single-tenant exposure (12.8% of the pool). In addition, distressed class 3F may be subject to further rating actions should realized losses be greater than Fitch's expectations.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch has upgraded the following classes as indicated:
--\\$4.1 million class 3C to 'AAAsf' from 'AAsf'; Outlook Stable;
--\\$19.5 million class 3D to 'Asf' from 'BBB+sf'; Outlook Stable.
Fitch has affirmed the following ratings as indicated:
--\\$6.5 million class 3E at 'BBBsf'; Outlook to Stable from Negative;
--\\$10.8 million class 3F at 'CCCsf'; RE 100%;
--\\$2.5 million class 3G at 'Dsf'; RE 60%.
The class 3A-1, 3A-2, 3X and 3B certificates have paid in full. Fitch does not rate the class 3H certificates.
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