NEW YORK--(BUSINESS WIRE)--Fitch Ratings has downgraded two and affirmed 20 classes of Credit Suisse First Boston Mortgage Securities Corp. series 2005-C5, commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The downgrades reflect a greater certainty of losses to the already distressed classes. The revisions in Rating Outlooks reflect increased loss expectations for the overall pool, incorporating expected paydown from defeasance and maturing loans. Fitch modeled losses of 6% of the remaining pool; expected losses on the original pool balance total 7.5%, including $89.9 million (3.1% of the original pool balance) in realized losses to date. Fitch has designated 53 loans (17.4% of the pool) as Fitch Loans of Concern, which includes seven specially serviced assets (4.5% of the pool).
As of the July 2014 distribution date, the pool's aggregate principal balance has been reduced by 26.7% to $2.15 billion from $2.94 billion at issuance. Per the servicer reporting, 31 loans (23.8% of the pool) are defeased, including the largest loan in the pool. Maturities are concentrated in 2015 at 90.7% of the remaining pool, including the defeased loans. Interest shortfalls are currently affecting classes K through S.
The largest contributor to expected losses is a specially serviced loan (1.8% of the pool) secured by two office properties totaling 313,847 square feet (sf), each of which is located in Phoenix, AZ. The loan transferred to special servicing effective March 2013 due to monetary default and foreclosure took place in September 2013. Per the May 2014 rent roll, total occupancy has declined to 72%, which is roughly in-line with the Phoenix office market. Per the special servicer, one of the two properties has been listed for sale and is nearing the end of the bid process with a final sale anticipated this quarter.
The second largest contributor to expected losses is a specially serviced loan (1.3% of the pool) secured by a 1,747,418 sf regional mall (537,716 sf collateral) originally built in 1954 and located in Southfield, MI (Detroit MSA). The loan transferred to special servicing in May 2014 due to imminent default. JC Penney (283,534 sf) and National Wholesale Liquidators (117,750 sf) both vacated several years ago and the borrower has had difficulty re-leasing the spaces. Currently there is insufficient cash flow to pay operating expenses and make capital repairs; the loan remains current as of the July 2014 distribution date. The reported debt service coverage ratio (DSCR) for year-end (YE) 2013 was 0.73x, down from 1.46x at YE 2012. The Mall occupancy was 49% as of April 2014.
The third largest contributor to expected losses is secured by a 308,353 sf retail center located in Littleton, CO, approximately 10 miles southwest of Denver (1.9% of the pool). Occupancy previously declined in fourth quarter 2011 as a result of Stein Mart vacating (11% of gross leasable area [GLA]). As of YE 2013, occupancy and DSCR were 80% and 0.94x, respectively, which represents a continued decline in performance from YE 2012.
RATING SENSITIVITIES
The ratings for classes A-4 through B are expected to remain stable as credit enhancement is expected to continue to increase due to paydown from the defeased loans and those paying off at maturity in 2015. Rating Outlooks on classes C through F are Negative; should loss expectation on the specially serviced loans increase or performance deteriorate further on some of the already underperforming assets including several regional malls, these classes may be subject to downgrades. The distressed classes (those rated below 'B') are expected to be subject to further downgrades as losses are realized.
Fitch downgrades the following classes as indicated:
--$21.8 million class H to 'CCsf' from 'CCCsf', RE 0%;
--$32.6 million class J to 'Csf' from 'CCsf', RE 0%.
Fitch affirms the following classes and revises Outlooks as indicated:
--$923.4 million class A-4 at 'AAAsf', Outlook Stable;
--$416.6 million class A-1-A at 'AAAsf', Outlook Stable;
--$290.2 million class A-M at 'AAAsf', Outlook Stable;
--$224.8 million class A-J at 'AAsf', Outlook to Stable from Negative;
--$24.9 million class B at 'Asf', Outlook Stable;
--$47.6 million class C at 'BBBsf', Outlook to Negative from Stable;
--$21.8 million class D at 'BBB-sf', Outlook to Negative from Stable;
--$18.1 million class E at 'BBsf', Outlook to Negative from Stable;
--$29 million class F at 'Bsf', Outlook to Negative from Stable;
--$36.3 million class G at 'CCCsf', RE 20%;
--$32.6 million class K at 'Csf', RE 0%;
--$723,653 class L at 'Dsf', RE 0%;
--$0 class M at 'Dsf', RE 0%;
--$0 class N at 'Dsf', RE 0%;
--$0 class O at 'Dsf', RE 0%;
--$0 class P at 'Dsf', RE 0%;
--$0 class Q at 'Dsf', RE 0%;
--$5 million class 375-A at 'AAAsf', Outlook Stable;
--$8.7 million class 375-B at 'AAAsf', Outlook Stable;
--$19.5 million class 375-C at 'AAAsf', Outlook Stable.
The class A-1, A-2, A-3, and A-AB certificates have paid in full. Fitch does not rate the class S certificates. Fitch previously withdrew the ratings on the interest-only class A-X, A-SP and A-Y certificates.
Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 11, 2013 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' (May 20, 2014);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 11, 2013).
Applicable Criteria and Related Research:
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=852174
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