Fitch Affirms WBCMT 2004-C12
Fitch Ratings has affirmed all classes of Wachovia Bank Commercial Mortgage Trust, commercial mortgage pass-through certificates, series 2004-C12 (WBCMT 2004-C12). A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The affirmation reflects stable pool performance since Fitch's last rating action in June 2012. Fitch modeled losses of 1.8% of the remaining pool; modeled losses of the original pool are at 1.9%, including losses already incurred to date.
As of the May 2013 distribution date, the pool's certificate balance has been reduced by 36.9% (to $670.4 million from $1.06 billion), of which 36.1% was due to paydowns and 0.8% was due to realized losses. In addition, eight loans (25.5% of the pool) have been fully defeased, including three of the top 15 loans. Fitch has designated 26 loans (46%) as Fitch Loans of Concern, which includes two specially serviced loans (2.6%). Interest shortfalls are currently affecting the unrated class P.
The ratings on classes A-1A through G are expected to remain stable due to loan amortization, loan payoffs, and defeasance, which will continue to delever the transaction. The Negative Outlook on classes H through L reflects the possibility for maturity defaults due to significant upcoming loan maturities, whereby 90% of the pool balance either has a maturity date or anticipated repayment date in 2014. Additionally, the Negative Outlook on classes J through L also reflects the thin nature of these classes, which make them susceptible to future downgrades.
The largest contributor to Fitch-modeled losses is a specially-serviced loan (1.8%) secured by a 140,006 square foot (sf) office property located in Westerville, OH. The loan transferred to special servicing in April 2011 for imminent maturity default due to the borrower's inability to repay the loan at the June 2011 maturity date. The borrower submitted a loan modification proposal to the special servicer, which has been returned with comments. There is significant concerns about tenant rollover risk at the property as nearly 90% of the total square footage has near-term lease expirations within the next two years. The borrower continues to negotiate lease extensions with the major tenants in order to improve the loan's ability to refinance or to obtain a better loan extension option, but has not been successful to date. The special servicer commenced foreclosure proceedings in January 2012 and is continuing litigation while dual tracking negotiations with the borrower.
The second largest contributor to Fitch modeled losses is a loan (1%) secured by a multifamily property located in Citrus Heights, CA. Property occupancy and cash flow have both continued to decline. As of year-end (YE) 2012, property occupancy was 80% compared to 88% and 92% at YE 2011 and at issuance, respectively. Property cash flow is unable to support debt service shortfalls. As of YE 2012, the debt service coverage, on a net operating income basis, was 0.80x, down from 0.91x at YE 2011.
The third largest contributor to Fitch modeled losses is a specially serviced loan (0.8%) secured by a 39,356 sf office property located in Warren, NJ. The loan was transferred to special servicing in March 2013 due to imminent monetary default. The borrower is seeking debt relief. The special servicer is conducting its due diligence to assess conditions at the property and its rights and remedies under the loan documents.
Fitch has affirmed the following classes as indicated:
--$57.9 million class A-1A at 'AAAsf'; Outlook Stable;
--$3.9 million class A-3 at 'AAAsf'; Outlook Stable;
--$474.9 million class A-4 at 'AAAsf'; Outlook Stable;
--$25.2 million class B at 'AAAsf'; Outlook Stable;
--$9.3 million class C at 'AA+sf'; Outlook Stable;
--$22.6 million class D at 'AA-sf'; Outlook Stable;
--$10.6 million class E at 'Asf'; Outlook Stable;
--$12 million class F at 'A-sf'; Outlook Stable;
--$12 million class G at 'BBB+sf'; Outlook Stable;
--$13.3 million class H at 'BBB-sf'; Outlook Negative;
--$4 million class J at 'BBsf'; Outlook Negative;
--$2.7 million class K at 'BBsf'; Outlook Negative;
--$5.3 million class L at 'Bsf'; Outlook Negative;
--$4 million class M at 'B-sf'; Outlook Negative;
--$2.7 million class N at 'CCCsf'; RE 70%;
--$2.7 million class O at 'CCCsf'; RE 0%;
--$12.7 million class MAD at 'AAAsf'; Outlook Stable.
Classes A-1 and A-2 have been paid in full. Fitch does not rated class P. Fitch had previously withdrawn the rating of the interest-only class IO.
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
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (June 6, 2012);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 18, 2012).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
Fitch Ratings, Inc.
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