TEXT-Fitch Downgrades 2 Classes of First Union National Bank Commercial Mortgage Trust 2001-C3

Tue Feb 26, 2013 6:09pm EST

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NEW YORK, February 26 (Fitch) Fitch Ratings has downgraded two classes and affirmed three classes of First Union National Bank Commercial Mortgage Trust 2001-C3, commercial mortgage pass-through certificates series. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The downgrades are due to increased certainty of losses on the speculative rated classes. Fitch modeled losses of 18.1% of the remaining pool; expected losses on the original pool balance total 4%, including losses already incurred. Fitch has designated three loans (51.4% of the pool) as Fitch Loans of Concern, which includes two specially serviced assets (34.8% of the pool).

As of the February 2013 distribution date, the pool's aggregate principal balance has been reduced by 97.3% to $22.3 million from $818.8 million at issuance. Eleven loans remain, two of which (34.8% of the pool) are in special servicing. The pool has experienced $28.6 million (3.5% of the original pool balance) in realized losses to date. There is one defeased loan in the pool (20.4% of the pool). Interest shortfalls are currently affecting classes M through P.

The largest contributor to expected losses is a specially-serviced loan (24.1% of the pool), which is secured by a 103,665 sf suburban office property located in Wheaton, IL within the Chicago MSA. The loan was transferred to special servicing in 2010 due to imminent default and matured in 2011. Occupancy was 74.6% as of January 2013.

The second largest contributor to expected losses is a specially-serviced loan (10.7% of the pool), which is secured by a 59,065 sf suburban office building located in Schaumburg, IL within the Chicago MSA. The loan transferred to special servicing in 2011 due to maturity default. Foreclosure sale is anticipated for the end of March 2013. Occupancy was 60% as of January 2013.

The third largest contributor to expected losses is a 96-unit, 9-building garden style apartment complex located in Austin, Texas (16.6% of the pool).

Fitch downgrades the following classes and assigns or revises Recovery Estimates (REs) as indicated:

--$4.1 million class M to 'CCCsf' from 'Bsf'; RE 100%;

--$4.1 million class N to 'Dsf' from 'Csf'; RE 0%.

Fitch affirms the following classes as indicated:

--$8 million class K at 'BBBsf'; Outlook Stable;

--$6.1 million class L at 'BBsf'; Outlook Stable;

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

The class A-1, A-2, A-3, B, C, D, E, F, G, H and J certificates have paid in full. Fitch does not rate the class P certificates. Fitch previously withdrew the rating on the interest-only class IO-I certificates.

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 18, 2012 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 >> CMBS >> Criteria Reports