Fitch Affirms All Classes of Queens Center Mortgage Trust 2013-QC

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings affirms Queens Center Mortgage Trust, commercial mortgage pass-through certificates, series 2013-QC. A full list of rating actions follows at the end of this rating action commentary.

KEY RATING DRIVERS

The affirmations are the result of continued strong property performance. The annualized June 30, 2015 servicer-reported net operating income (NOI) has improved 11% compared to issuance. Occupancy, in-line comparable stores sales and the related occupancy costs also remained strong at 94%, $1,097 per square foot (psf) and approximately 21.8%, respectively. Due to the exceptionally high tenant sales at this regional mall, Fitch applied a stressed capitalization rate lower than the typical range for retail properties, resulting in a Fitch stressed loan to value (LTV) of 64% an improvement over 75% at issuance.

The property is a four-story regional shopping mall located in Elmhurst, NY, in the heart of Queens. The property was originally built in 1974 and last renovated in 2004. The current square footage is 967,901, of which 411,177 sf is collateral for the loan. The two anchors, Macys and JC Penney, each own their own stores and are not part of the loan collateral. In addition to the anchor stores, there are approximately 150 tenants, including Forever 21, H&M, Modell's Sporting Goods, Banana Republic, Express, Gap, Urban Outfitters, and Victoria's Secret. The Apple Store opened in July 2015 and is the first of its kind to open in one of the NYC boroughs outside of Manhattan. As a result of the Apple Store opening, leasing activity at the property remains very active with increased foot traffic. Per the master servicer, the center continues to receive positive feedback from its customers on the many new stores that have opened over the last year and the common area is filled with income generating uses and growing every day.

Queens Center features a diverse tenant mix that generated total sales of approximately $520.6 million and exceptional in-line sales of $1,097 psf for the trailing 12-month (TTM) period ended May 31, 2015, which places the property as one of the top performing malls in the country. The mall is unique among other malls with sales in this range due to enormous customer traffic, estimated at 18 million visitors per year, and a lower average per purchase basis given the lack of luxury retailers, which are prevalent at many of the country's top performing malls.

The loan sponsor is an entity controlled by The Macerich Company (MAC) with a 51% ownership interest and Ontario Teachers' Pension Plan (OTPP), which has a 49% interest.

RATING SENSITIVITIES

The Outlook remains Stable for classes A and X-A. Rating Outlooks for classes X-B, C, and D have been revised to Positive due to continued strong property performance. Fitch will review the transaction again once year-end (YE) 2015 financials are received and if performance remains consistent upgrades to these classes are possible. Fitch does not foresee downgrades unless there is a material decline in property performance.

DUE DILIGENCE USAGE

No third-party due diligence was provided or reviewed in relation to this rating action.

Fitch has affirmed and revised outlooks as indicated:

--$400.2 million class A at 'AAAsf'; Outlook Stable;

--$400.2 million class X-A at 'AAAsf'; Outlook Stable;

--$77.2 million class X-B at 'AA-sf'; Outlook to Positive from Stable;

--$77.2 million class B at 'AA-sf'; Outlook to Positive from Stable;

--$52.8 million class C at 'A-sf'; Outlook to Positive from Stable;

--$69.8 million class D at 'BBB-sf'; Outlook to Positive from Stable.

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

Related Research

Queens Center Mortgage Trust 2013-QC, Series 2013-QC -- Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=701651

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=994527

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=994527

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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20151120005995/en/

Fitch Ratings
Primary Analyst
Lisa Cook, +1-212-908-0665
Director
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Committee Chairperson
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations
Hannah James, +1-646-582-4947 (New York)
[email protected]

Source: Fitch Ratings

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