NEW YORK--(BUSINESS WIRE)--Fitch Ratings has upgraded two classes and affirmed two classes of Deutsche Bank's COMM 2011-FL1 floating-rate commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The upgrades reflect the increase in credit enhancement to the Fitch rated classes due to the payoff of three loans since Fitch's last rating action. One loan remains, the Standard Hotel loan. As of the February 2014 distribution date, the transaction's aggregate principal balance has been reduced by 81.7% to $113 million from $619 million at issuance.
RATING SENSITIVITIES
The Rating Outlooks are expected to remain Stable for the remainder of the transaction. The performance of the Standard Hotel, including occupancy and revenue per available room (RevPAR), remain strong. Additional information on rating sensitivity is available in the Fitch report 'COMM 2011-FL1', dated Oct. 27, 2011.
The Standard Hotel loan is secured by the fee interest in the Standard Hotel, a 337-key luxury hotel located in Manhattan's Meatpacking District. As of third-quarter 2013, the trailing 12-month (TTM) occupancy and RevPAR were 89.1% and $346.66, respectively, compared with 86% and $323.26 at issuance. Although the servicer-reported third-quarter 2013 net cash flow (NCF) was approximately 4% lower than issuance, the occupancy and RevPAR are higher. The implied senior note debt yield is 18% based on the latest reported operating income. This boutique hotel derives higher than typical income from food & beverage (and corresponding higher expenses). There is $92 million of mezzanine debt held outside of the trust.
According to recent media reports, the Standard Hotel is expected to sell for approximately $400 million, or nearly $1.2 million per key. Using the annualized third-quarter reported net operating income (NOI), this would equate to an approximately 6% capitalization rate.
Fitch upgrades the following two classes as indicated:
--$20.2 million class B to 'AAAsf' from 'AAsf'; Outlook Stable;
--$21.6 million class C to 'AAsf' from 'Asf'; Outlook Stable.
Fitch affirms the following classes:
--$31.4 million class A at 'AAAsf'; Outlook Stable;
--$13.5 million class D at 'BBBsf'; Outlook Stable.
The non-pooled class NH1 is paid in full. Fitch does not rate classes E, F, non-pooled class ESG1 and interest-only class X.
Additional information is available at 'www.fitchratings.com'.
A comparison of the transaction's Representations, Warranties, and Enforcement (RW&E) mechanisms to those of typical RW&Es for the asset class is available in the following report:
--'COMM 2011-FL1 - Appendix' (Oct. 27, 2011).
Applicable Criteria and Related Research:
--'COMM 2011-FL1' (Oct. 27, 2011);
--'Global Structured Finance Rating Criteria' (May 2013);
--'Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions' (Sept. 2013).
Applicable Criteria and Related Research:
Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=718468
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661
COMM 2011-FL1 -- Appendix
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=654627
COMM 2011-FL1
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=654626
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=821953
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