Fitch Affirms COMM 2012-CCRE5
KEY RATING DRIVERS
The affirmations are due to stable performance of the underlying pool collateral. As of the September 2016 distribution date, the pool's aggregate principal balance has been reduced by 10.7% to $1 billion from $1.13 billion at issuance. Per the servicer reporting, seven loans (7.8% of the pool) are defeased. Interest shortfalls are currently affecting class H. The pool has experienced no realized losses to date.
There was a variance from criteria related to class D where Fitch's surveillance criteria would indicate that an upgrade is possible. However, an upgrade was not warranted as overall performance remains in-line with issuance with limited paydown and amortization. As of year-end 2015, aggregate pool-level net operating income (NOI) was 2% lower than NOI at issuance. Additionally, concerns related to the Holiday Village Mall (2.6%) which has seen deterioration in performance as a result of an anchor vacancy remain.
Four loans appear on the servicer watchlist (9.6% of the pool) due to declines in debt service coverage ratio (DSCR) and the occurrence of a servicing trigger event due to an upcoming termination option. In particular, the Holiday Village Mall loan (2.6%), which is secured by a 576,987-square foot (sf) (494,928 sf of collateral) regional mall located in Great Falls, MT is on the watchlist due to Sears (15% of the net rentable area [NRA]) vacating in 2014. As of year-end 2015, NOI was 4% below NOI at issuance with reported DSCR of 1.97x.
The largest loan in the pool (8.8%) is the Eastview Mall and Commons loan, which is secured by two adjacent retail properties located in Victor, NY. The Eastview Mall is a 1.37 million sf regional mall (725,303 sf of collateral) and the Eastview Commons is a 341,871-sf (86,368 sf of collateral) power center. The transaction interests represent the A-2 note, which is pari passu to the A-1 note that is securitized in COMM 2012-CR4. Per servicer reporting, the year-end (YE) 2015 debt service coverage ratio (DSCR) of 2.03x remains in-line with 2.14x at YE2014 and 2.19x at issuance. The combined occupancy at the properties was 95% as of YE2015.
The second largest loan, Harmon Corner (6.8% of the pool), is secured by a 66,833-sf portion of a 110,000-sf retail center located along the Strip in Las Vegas, NV. The transaction interest represents the A-1 note, which is pari passu with the A-2 note that is securitized in transaction COMM 2013-LC6. The A-1 note represents the controlling piece. Performance has declined with YE2015 NOI 4.4% below 2014 and remains 31.8% lower than issuance. The NOI decline is driven by the largest tenant, Goretorium (22%), vacating in late 2013. The tenant was replaced by Rainforest Cafe which opened in September 2015.
The third largest loan, 200 Varick Street (6.3% of the pool), is secured by a 12-story, 430,397-sf office property located in the southern portion of the Greenwich Village neighborhood of New York City. Performance remains stable as the property is 100% occupied and YE2015 NOI has improved 13% from issuance. Revenue has increased 16% from issuance, but is outpaced by expense inflation, which has grown 20% from issuance. According to Reis' second-quarter 2016 report, the Broadway submarket of NY had a vacancy rate of 5.3% with average asking rents of $51.15 psf. The subject underperforms the submarket with respect to in-place rent.
Rating Outlooks for all classes remain Stable due to overall stable performance of the pool and continued amortization. Upgrades may occur with improved pool performance and significant paydown or defeasance. Downgrades to the classes are possible should overall pool performance decline. Fitch will continue to monitor the performance of the Holiday Village Mall and the impact of the Sears store closing.
USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10
Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.
--$135.4 million class A-2 at 'AAAsf'; Outlook Stable;
--$90.9 million class A-SB at 'AAAsf'; Outlook Stable;
--$100 million class A-3 at 'AAAsf'; Outlook Stable;
--$357.6 million class A-4 at 'AAAsf'; Outlook Stable;
--$807.1 million class X-A at 'AAAsf'; Outlook Stable;
--$52.4 million class X-B at 'AAsf'; Outlook Stable;
--$123.3 million class A-M at 'AAAsf'; Outlook Stable;
--$52.4 million class B at 'AAsf'; Outlook Stable;
--$211.1 million class PEZ at 'Asf'; Outlook Stable;
--$35.4 million class C at 'Asf'; Outlook Stable;
--$22.7 million class D at 'BBB+sf'; Outlook Stable;
--$32.6 million class E at 'BBB-sf'; Outlook Stable;
--$21.3 million class F at 'BBsf'; Outlook Stable;
--$18.4 million class G at 'Bsf'; Outlook Stable.
The class A-1 certificates have paid in full. Fitch does not rate the class H certificates.
The class A-M, B, and C certificates may be exchanged for the class PEZ certificates, and the class PEZ certificates may be exchanged for the class A-M, B, and C certificates. Fitch rates the class PEZ equivalent to the first loss of the lowest rated class C exchangeable certificates.