CHICAGO--(BUSINESS WIRE)--Fitch Ratings has downgraded one and affirmed three classes of COMM Mortgage Trust 2005-FL10. A detailed list of rating actions follows at the end of this release.
KEY RATING DRIVERS
As of the February 2016 remittance, the pool has paid down by 98% since issuance, with only one asset remaining.
The downgrade of the distressed rating is due to the continued deterioration of the one remaining asset in the pool, the Berkshire Mall. The ratings reflect exceptionally high credit risk associated with the asset. The mall comprises 589,146 square feet (sf) of a 715,146 sf regional mall located in Lanesboro, MA, about 40 miles east of Albany, NY. The collateral consists of 192,793 sf of in-line space and 396,353 sf of anchor/major tenant space. The non-collateral anchor space (Target) totals approximately 126,000 sf.
Recently, anchor tenants Macy's and Best Buy announced that they will be closing their stores. The mall continues to face significant challenges related to trade area fundamentals, tenant retention and capital expenditure needs which will ultimately affect investor interest and the long-term viability of the asset. The immediate trade area for the subject property is considered rural and tertiary in nature and is confronting declining population trends with incomes below state and national levels. Although, the theater tenant executed a long-term renewal, the vacancy of the anchors contributes to the declining trajectory of the mall and low likelihood of recoverability on the asset.
The loan transferred to special servicing in January 2014 due to the imminent expiration of the forbearance agreement. A deed-in-lieu of foreclosure was executed in June of 2014 and the asset remains real estate owned. The mall is being managed and leased by CBL & Associates Properties, which specializes in new development and repositioning of distressed properties.
RATING SENSITIVITIES
The ratings of the remaining distressed classes (those rated below 'Bsf') are subject to further downgrade as losses are realized. Fitch anticipates significant losses based on current valuations of the asset and uncertainty related to the stabilization of the asset. Upgrades are considered unlikely due to the distressed nature of the collateral.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch has downgraded the following class as indicated:
--$6.4
million class J to 'Csf' from 'CCCsf'; RE 0%.
Fitch has affirmed the following classes as indicated:
--$19.8
million class K at 'Csf'; RE 0%;
--$6.5 million class L at 'Csf';
RE 0%;
--$4.3 million class M at 'Dsf'; RE 0%.
The following classes, originally rated by Fitch, have paid in full: A-1, A-J1, A-J2, X-1, MOAX-1, MOAX-2, MOAX-3, B, C, D, E, F, MOA-1, MOA-2, N-PC, O-PC, P-PC, Q-PC, N-DEL and O-DEL.
Fitch does not rate the class A-J3, G, H and MOA-3 certificates.
In addition, Fitch previously withdrew the ratings on the interest-only classes X-2-DB, X-2-NOM, X-2-SG, X-3-DB, X-3-NOM and X-3-SG.
Additional information is available at www.fitchratings.com.
Applicable Criteria
Criteria for Analyzing Large Loans in U.S.
Commercial Mortgage Transactions (pub. 27 Aug 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=870009
Global
Structured Finance Rating Criteria (pub. 06 Jul 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1000766
Solicitation
Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1000766
Endorsement
Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.