Fitch Affirms CMSC 1999-2
KEY RATING DRIVERS
The affirmations follow a recent upgrade of the class K certificate based on significant defeasance in the transaction. Today's affirmations are a result of an in-depth analysis of the collateral performance, which has remained stable since the last surveillance review. No loans have left the pool in the last twelve months, with four of the original 92 loans still outstanding.
One of the remaining loans, representing 36.2% of the current pool balance, is fully defeased. Two of the four remaining loans are fully amortizing, and no loans are scheduled to mature until September 2018. There is one loan on the servicer's watchlist and no loans in special servicing.
The Rating Outlooks on classes K and L are Stable due to the likelihood of full principal recovery. No further upgrades are warranted at this time to class L as it has previously experienced interest shortfall and the bond's principal amount is not fully covered by the current defeasance.
The deal is heavily concentrated, with only four loans remaining. The largest loan in the pool, 750 University Avenue (36.9% of the current pool balance), is also on the servicer's watchlist for low DSCR. The collateral is a 62,042 sf office property situated 10 miles south of San Jose, California. The loan has been on the watchlist since June 2010. The YE2014 DSCR was reported to be 0.93x, which indicates some improvement over the YE2013 DSCR of 0.84x and 0.81x at YE2012. According to the April 2015 rent roll, the property was 94.5% occupied. The two largest tenants, together representing 25% of the NRA, have recently executed five-year renewals on their leases which were both scheduled to expire before YE2015. Two additional tenants recently vacated the property following their respective lease expirations; however, one of these spaces has already been re-leased, while the other remains empty but is being marketed. Given the low leverage (49.9% LTV), strong market location and full amortization schedule, Fitch does not believe this loan to be at immediate risk for default, but will continue to monitor the asset's performance.
The second largest loan, Solberg Tower, is fully defeased and scheduled to mature in October 2018. The third and fourth largest loans make up the remaining 26.9% of the pool balance.
Windtree Phase II Apartments (18% of the current pool balance) is secured by a 128-unit multifamily property in Fayetteville, North Carolina. The property is in close proximity to Fort Bragg. According to the borrower, approximately 20% of the residents are employed by the military. A March 2015 rent roll indicated the property was 89.9% occupied, and the YE2014 DSCR was reported to be 1.66x, up from 1.46x at YE2013 and 1.33x at YE2012.
Ashley Place Apartments (8.9% of the current pool balance) is secured by a 96-unit garden-style multifamily property in North Miami, Florida. In the last three years, reported occupancy has not dipped below 97%, and the YE2014 DSCR indicated strong coverage at 2.36x. This loan is fully amortizing.
Fitch affirms the following classes:
--\\$2.6 million class K at 'AAAsf'; Outlook Stable;
--\\$5.9 million class L at 'Asf'; Outlook Stable.
Fitch does not rate the class M certificate and Fitch previously withdrew the rating on the interest-only class X certificate.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.