CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed Vornado DP LLC Trust 2010, series 2010-VNO commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this release.
KEY RATING DRIVERS
The affirmations are a result of relatively stable performance of the underlying collateral properties since issuance. Occupancy declined slightly from 96% at YE 2012 to 95% at YE 2013 but has since rebounded to 95.9% as of March 2014. The portfolio had a 2% decrease in net cash flow (NCF) since last review and 7% paydown to the pool since issuance resulting from scheduled amortization.
The pool consists of a single non-recourse mortgage loan secured by cross-collateralized and cross-defaulted first-lien mortgages or deeds of trust on fee interests in 40 retail properties. The fixed-rate component loan amortizes on a 30-year schedule. The loan is sponsored by Vornado Realty L.P. (rated 'BBB', Stable Outlook by Fitch), an affiliate of the depositor and the borrowers.
The 40 collateral properties are scattered throughout the Northeast, with considerable concentrations in New Jersey (25 properties, 72% of the allocated loan amount) and Pennsylvania (seven, 13%). The tenant base is diverse and consists primarily of national and large regional tenants, including Wal-Mart (14% of the net rentable area [NRA], rated 'AA', Stable Outlook), Lowe's (11%), and Home Depot (10%; rated 'A-', Stable Outlook). Most of the leases are long-term in nature.
As part of its review, Fitch analyzed occupancies at the properties based on rent rolls dated March 2014. Across the portfolio, occupancy remained strong at 95.9%, compared with 97.4% at issuance. As of YE 2013, the Fitch adjusted debt service coverage ratio (DSCR) for the loan was 1.57x, compared with 1.41x at issuance. The DSCR was calculated based on a Fitch adjusted NCF (reflective of an additional vacancy factor, a stabilized management fee, and deductions for stabilized capital expenditures and leasing costs) and a stressed debt service amount calculated using a 9.25% refinance constant.
As of the June 2014 distribution date, the pool's aggregate certificate balance has paid down approximately 7% to $613.9 million from $660 million at issuance. The loan is scheduled to mature in September 2020.
RATING SENSITIVITIES
The Rating Outlooks remain Stable, which reflects the stable collateral performance. Fitch does not expect any rating actions unless there are material changes to the underlying property occupancy, cash flow, or significant paydown from amortization. Future upgrades are possible with stable or improved performance and additional amortization. Future downgrades are possible should there be a material decline in portfolio cash flow or occupancy.
Fitch affirms the following classes:
--$93.9 million class A-1 at 'AAAsf'; Outlook Stable;
--$304.3 million class A-2-FX at 'AAAsf'; Outlook Stable;
--$60 million class A-2-FL at 'AAAsf'; Outlook Stable;
--$38.7 million class B at 'AAsf'; Outlook Stable;
--$57 million class C at 'Asf'; Outlook Stable;
--$60 million class D at 'BBB-sf'; Outlook Stable.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 20, 2014);
--'Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions' (Sept. 20, 2013).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821
Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=718468
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=836556
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