Fitch Affirms WFRBS 2012-C9; Revises Outlook for 3 Classes
KEY RATING DRIVERS
The affirmations are the result of the stable performance of the underlying pool collateral since issuance. As of the July 2016 distribution date, the pool's aggregate principal balance has been reduced by 6.4% to $985 million from $1.05 billion. Per the servicer reporting, five loans (6.4% of the current balance) are defeased. There are no loans in special servicing. Fitch has designated two loans (2%) as Fitch Loans of Concern.
There were variances from criteria related to classes B, C, D, E and F. The surveillance criteria indicated that rating upgrades were possible for these classes. However, Fitch determined that an upgrade was not warranted at this time as there has been no material improvement to the performance of the pool since issuance and minimal increase in credit enhancement.
The largest loan in the pool (10.7%) is secured by a 1 million square foot (sf) regional mall with an adjacent strip shopping center located in North Chesterfield, VA. The property is anchored by Sears (non-collateral), JC Penney (non-collateral) and Macy's. As of year-end (YE) 2015, the property was 96% occupied. The servicer reported net operating income (NOI) debt service coverage ratio (DSCR) decreased slightly to 1.65x as of YE 2015 from 1.79x YE 2014.
The next largest loan (5.8%) is secured by a 38-story office tower, three office buildings and two parking garages located in Kansas City, MO. The property is one of only a handful of Class-A office buildings within the downtown area and contains 844,456 sf. Per the March 2016 rent roll, the property was 95% occupied. The property continues to perform above its underwritten NOI DSCR with a ratio of 2.36x as of YE 2015.
The third largest loan (4.8%) is secured by a 302,779 sf retail center located in Newark, DE. The subject property is 10 miles southwest of Wilmington, DE and 40 miles southwest of Philadelphia. The center is anchored by Costco, which is 47% of net rentable area (NRA) with a lease expiration of September 2018, Dick's Sporting Goods (17% of NRA, expiry November 2023), and HH Gregg (11% of NRA, expiry May 2020). The subject has been 100% occupied since issuance. Servicer reported NOI DSCR increased to 1.53x as of YE 2015 from 1.39x YE 2014.
The Rating Outlooks for classes B, C, and X-B have been revised to Positive to reflect the defeased collateral and increased credit enhancement. An upgrade may be warranted if additional loans are defeased and the transaction continues to pay down. The Rating Outlooks for classes A-1 through A-S, D, E, F, and X-A remain Stable due to overall stable pool performance.
USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch affirms the following classes:
--$18.8 million class A-1 at 'AAAsf', Outlook Stable;
--$110.4 million class A-2 at 'AAAsf', Outlook Stable;
--$444.2 million class A-3 at 'AAAsf', Outlook Stable;
--$96.2 million class A-SB at 'AAAsf', Outlook Stable;
--$93.4 million class A-S at 'AAAsf', Outlook Stable;
--$801.9 million* class X-A at 'AAAsf', Outlook Stable;
--$101.3 million* class X-B at 'A-sf', Outlook to Positive from Stable;
--$64.5 million class B at 'AA-sf', Outlook to Positive from Stable;
--$36.8 million class C at 'A-sf', Outlook to Positive from Stable;
--$42.1 million class D at 'BBB-sf', Outlook Stable;
--$21.1 million class E at 'BBsf', Outlook Stable;
--$19.7 million class F at 'Bsf', Outlook Stable.
*Notional amount and interest only.
Fitch does not rate the class G certificates.