Fitch Affirms Wells Fargo Bank, N.A. Series 2010-C1
KEY RATING DRIVERS
The affirmations reflect stable portfolio performance since issuance. The pool has experienced no realized losses to date. Fitch has designated two loans (1.8% of the pool) as Fitch Loans of Concern including one specially serviced loan (0.6% of the pool).
As of the August 2015 distribution date, the pool's aggregate principal balance has been reduced by 13% to \\$639.8 million from \\$735.9 million at issuance. Per the servicer reporting, two loans (7.9% of the pool) are defeased. Interest shortfalls are currently affecting the non-rated class G.
The largest loan (19.9% of the pool) was originally secured by a portfolio of 14 single-tenant properties which consisted of seven office buildings, five industrial distribution centers, one data center and one R&D facility. A partial defeasance for three properties (two office and one industrial), which represents approximately 25% of the of the original loan balance, was completed in second quarter 2015. The portfolio now consists of 11 properties located in various states with a combined size of 2.5 million square feet. Occupancy for the collateral has remained above 97% for the past three years.
The second-largest loan (7.8% of the pool) is secured by a regional mall located in Watertown, NY and is anchored by Sear's, Burlington Coat Factory, and Gander Mountain. The servicer-reported occupancy and debt service coverage ratio (DSCR) were 94.6% and 2.28x respectively as of year-end (YE) 2014. Approximately 14% of tenant leases expire in 2016, including the September lease expiration of Sears. Fitch has requested a leasing status update and will continue to monitor the loan as updates are received.
The largest Fitch Loan of Concern (1.1% of the pool) is secured by a 115-unit student housing complex located near Western Michigan University in Kalamazoo, Michigan. The servicer continues to report market conditions have been negatively impacted by lower enrollment at the university. The servicer-reported DSCR declined to 0.45x as of YE 2014 from 0.65x at YE 2013, while occupancy remained flat at 80% during the same period.
The Rating Outlook for class B was revised to Positive from Stable. An upgrade is possible should the pool's performance improve due to deleveraging. The Stable Outlooks on the remaining classes reflect stable performance and increased credit enhancement. The collateral has a Fitch stressed weighted average Loan to Value (LTV) of 64%. Downgrades would be considered if there were material, negative changes to property occupancies or cash flows, increased delinquencies, or loans transferred to special servicing.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch has affirmed the following classes:
--\\$70 million class A-1 at 'AAAsf'; Outlook Stable;
--\\$443.3 million class A-2 at 'AAAsf'; Outlook Stable;
--\\$509.2 million class X-A* at 'AAAsf'; Outlook Stable;
--\\$22.1 million class B at 'AAsf'; Outlook to Positive from Stable;
--\\$31.3 million class C at 'Asf'; Outlook Stable;
--\\$34 million class D at 'BBBsf'; Outlook Stable;
--\\$13.8 million class E at 'BBB-sf'; Outlook Stable;
--\\$12.9 million class F at 'Bsf'; Outlook Stable.