RPT-Fitch upgrades 1 class of WBCMT 2005-C17

Thu Aug 22, 2013 9:10am EDT

Aug 22 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has upgraded 1 class and affirmed 16 classes of Wachovia Bank Commercial Mortgage Trust commercial mortgage pass-through certificates, series 2005-C17. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrade is due to an increase in credit enhancement as a result of paydown and defeasance. Additionally the pool has experienced stable to improved cash flow performance.

Fitch modeled losses of 4.1% of the remaining pool; expected losses on the original pool balance total 4%, including $31.9 million (1.2% of the original pool balance) in realized losses to date. Fitch has designated 29 loans (26.6%) as Fitch Loans of Concern, which includes eight specially serviced assets (5.3%).

As of the August 2013 distribution date, the pool's aggregate principal balance has been reduced by 30.4% to $1.9 billion from $2.72 billion at issuance. Per the servicer reporting, 28 loans (19.3% of the pool) are defeased. Interest shortfalls are currently affecting classes L through P.

The largest contributor to expected losses is a 175,209 square foot (sf) office property located in Phoenix, AZ (1.1% of the pool). The loan transferred to special servicing in February 2010 for imminent maturity default and became real estate owned (REO) in September 2010. The special servicer reports that the property's occupancy was 48% as of April 2013, which has improved from 32% as of July 2011.

The next largest contributor to expected losses is a 169,334 (sf) grocery anchored retail center located in Las Vegas, NV (1.4%). The loan transferred to special servicer in March 2010 for monetary default and became REO in January 2011. The special servicer reports the property's current occupancy is 84%. The special servicer is trying to stabilize the property's occupancy at 90% and will look to dispose of the asset late in 2014.

The third largest contributor to expected losses is a 96,500 sf office property located in Falls Church, VA (0.8%). The loan transferred to special servicing after the property's sole tenant vacated the property in June 2012. The property became REO in January 2013 and the special servicer is focused on leasing the property. The special servicer reports the current occupancy is 8.4%.

RATING SENSITIVITY

The majority of the pool has Stable Rating Outlooks as performance remains stable to improving. The Positive Rating Outlook on class C is based on a stronger credit enhancement relative to its rating; with continued paydown and stable performance future upgrades are possible. Although credit enhancement is increasing to classes D and E, rating upgrades are not warranted due to potential for eroding credit enhancement should losses be greater than expected as the lower classes have thinner tranches. Additionally, 20.4% of the portfolio is maturing in the next 24 months.

Fitch upgrades the following class:

--$74.9 million class B to 'AAsf' from 'Asf'; Outlook to Stable from Positive. Fitch affirms the following classes, revises Outlook and assigns Recovery Estimates (REs) as indicated:

--$247.4 million class A-1A at 'AAAsf'; Outlook Stable;

--$57 million class A-PB at 'AAAsf'; Outlook Stable;

--$1.1 billion class A-4 at 'AAAsf'; Outlook Stable;

--$187.2 million class A-J at 'AAAsf'; Outlook Stable;

--$23.8 million class C at 'Asf'; Outlook to Positive from Stable;

--$47.6 million class D at 'BBBsf'; Outlook Stable;

--$27.2 million class E at 'BBsf'; Outlook Stable;

--$27.2 million class F at 'BBsf'; Outlook Stable;

--$30.6 million class G at 'Bsf'; Outlook Stable;

--$37.4 million class H at 'CCCsf'; RE 45%;

--$6.8 million class J at 'CCCsf'; RE 0%;

--$10.2 million class K at 'CCCsf'; RE 0%;

--$13.6 million class L at 'CCsf'; RE 0%;

--$6.8 million class M at 'Csf'; RE 0%;

--$6.8 million class N at 'Csf'; RE 0%;

--$6.8 million class O at 'Csf'; RE 0%.

The class A-1, A-2 and A-3 certificates have paid in full. Fitch does not rate the class P certificates. Fitch previously withdrew the ratings on the interest-only class X-P and X-C 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

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