Fitch Ratings has affirmed 14 classes of Wachovia Bank Commercial Mortgage Trust (WBCMT) commercial mortgage pass-through certificates series 2005-C21. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The affirmations reflect continued performance in-line with Fitch's expectations at the last rating action. Fitch modeled losses of 8.4% of the remaining pool; expected losses on the original pool balance total 6.7%, including $60.4 million (1.9% of the original pool balance) in realized losses to date. Fitch has designated 42 loans (34.3%) as Fitch Loans of Concern, which includes six specially serviced assets (14.8%).
As of the January 2015 distribution date, the pool's aggregate principal balance has been reduced by 42.7% to $1.86 billion from $3.25 billion at issuance. Interest shortfalls are currently affecting classes H through P. Per the servicer reporting, 34 loans (24.7% of the pool) are defeased, which includes a portion of the NGP Rubicon GSA loan (9.8% of the pool). The total debt exposure for the portfolio is $364 million including an identical pari passu portion in the WBCMT 2005-C20 transaction. In October 2014 the loan was split pari passu across both pools, with an $81 million loan piece (4.4%) fully defeased in each transaction.
The largest contributor to expected losses is the specially-serviced 6116 Executive Boulevard loan (2.8% of the pool), which is secured by a 207,055 square foot (sf) office building in Rockville, MD. The collateral transferred to special servicing in January 2014 for imminent default following the November 2013 lease expirations and tenant vacancies of the General Services Administration (GSA), National Institute of Health (NIH) (90% of the net rentable area (NRA)). The loan had gone into payment default in July 2014. The foreclosure took place in September 2014, and is pending transfer to REO upon receipt of the property deed. According to the servicer, occupancy is at 4% with no prospective tenants currently identified.
The next largest contributor to expected losses is the specially-serviced Park Place II (2.4%), a 253,674 sf retail center in Sacramento, CA anchored by Kohl's, and Marshalls. The center had experienced cash flow issues following the major tenant vacancies of Borders Books (previously 10% NRA) in January 2009 and Bed Bath & Beyond (10% NRA) in December 2011. The loan transferred to special servicing in January 2012 due to imminent default and subsequently went into payment default in September 2012. The property was foreclosed and has been REO since April 2013. The servicer is working to lease up the vacant space, with occupancy reported at 73% as of January 2015.
The third largest contributor to expected losses is the Metropolitan Square loan (6.7%), which is secured by a 1 million sf office tower in St. Louis, MO. The loan had transferred to special servicing in August 2012, and was subsequently modified in November 2012 and returned to the master servicer in March 2013. The loan has remained current under the modified terms, which included an interest rate reduction and an extension of the interest only period. The December 2014 rent roll reported occupancy at 79%, in-line with the St. Louis Downtown submarket which Reis reports at 20.4% vacancy as of third quarter 2014. The property's largest tenant is Bryan Cave LLP (23.6% NRA) whose lease expires in June 2022. Net operating income (NOI) debt service coverage ratio (DSCR) reported at 1.65x as of year to date September 2014.
RATING SENSITIVITY
The Negative Outlooks on classes C through F reflect property performance concerns for several of the loans in the top-15, including major tenant vacancies and rollover risk, combined with secondary and tertiary market exposure. In addition, the Negative Outlook reflects maturity concentration concerns with 99% of the pool scheduled to mature by year end 2015. Further rating actions on the classes are possible should realized losses be greater than Fitch's expectations.
Fitch affirms the following classes:
--$735.3 million class A-4 at 'AAAsf'; Outlook Stable;
--$212 million class A-1A at 'AAAsf'; Outlook Stable;
--$325 million class A-M at 'AAAsf'; Outlook Stable;
--$215.3 million class A-J at 'AAAsf'; Outlook Stable;
--$65 million class B at 'AAsf'; Outlook Stable;
--$32.5 million class C at 'AAsf'; Outlook Negative;
--$60.9 million class D at 'BBBsf'; Outlook Negative;
--$36.6 million class E at 'BBsf'; Outlook Negative;
--$40.6 million class F at 'Bsf'; Outlook Negative;
--$32.5 million class G at 'CCCsf'; RE 25%;
--$40.6 million class H at 'CCsf'; RE 0%;
--$16.3 million class J at 'CCsf'; RE 0%;
--$16.3 million class K at 'Csf'; RE 0%;
--$16.3 million class L at 'Csf'; RE 0%.
The class A-1, A-2PFL, A-2C, A-3 and A-PB certificates have paid in full. Fitch does not rate the class M, N, O and P certificates. Fitch previously withdrew the rating on the interest-only class IO certificates.
Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 10, 2014 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
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (Aug. 4, 2014);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 10, 2014).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=978865
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