Fitch Ratings has downgraded and assigned Rating Outlooks and Loss Severity (LS) Ratings to the following classes of Duke Weeks Industrial Trust's commercial mortgage pass-through certificates, series 2000-DW1:
--$30 million class B-2 to 'AA/LS1' from 'AAA'; Outlook Negative;
--$24.6
million class C-2 to 'A/LS1' from 'AA-'; Outlook Negative.
In addition, Fitch has affirmed and assigned Rating Outlooks and LS Ratings to the following classes as indicated:
--$145.4 million class A-2 at 'AAA/LS1'; Outlook Stable;
--Interest-only
class X-2 at 'AAA'; Outlook Stable.
Classes A-1, B-1, C-1, and X-1 have paid in full.
The downgrades are due to a decline in performance relative to Fitch's last formal review of the transaction. As of Jan. 1, 2010, portfoliowide occupancy was 86%, compared with 94% at the previous review and at issuance. The year-end (YE) 2009 Fitch stressed debt service coverage ratio (DSCR) was 1.54 times (x), compared with a peak of 1.96x at YE 2005 and 1.62x at the previous review.
The certificates are secured by a $200 million fixed-rate mortgage loan on 64 geographically diverse industrial properties totaling 11.2 million square feet (sf). The properties are located in four metropolitan markets: Cincinnati (37% of total sf); Indianapolis (36.7%); Atlanta (21.5%); and St. Louis (4.8%).
The portfolio faces upcoming lease expirations as follows (expressed as a percentage of total portfolio net rentable area [NRA]):
-- 2010: 16.7%;
-- 2011: 16%;
-- 2012: 8.5%;
-- 2013:
14.2%.
The portfolio benefits from a diverse rent roll, with no tenant representing more than 4% of the portfolio's NRA. The 2010 rollover concentration consists of more than 50 expiring tenants. However, the vacancy rates for markets in which the collateral is located have increased since issuance. The average market vacancy, weighted by the exposure in the pool, is approximately 9.8% as of fourth-quarter 2010 according to CoStar, up from 7.4% at issuance. Recent sales of industrial properties in those markets have been limited.
The loan matures on Oct. 15, 2010 and has no extension options. The loan, which has a balance per square foot of $18, is interest-only throughout the term and has a coupon of 7.52%. The actual servicer-reported DSCR was 2.26x as of YE 2009 on a net operating income basis. The borrower has not yet disclosed its plans to refinance or repay the loan at maturity.
Additional information on Fitch's criteria for analyzing single borrower transactions is available in the Oct. 7, 2008 report, 'U.S. CMBS Surveillance 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'.
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+1-212-908-0869 (New York)
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