Fitch Upgrades COMM 2010-C1

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has upgraded two and affirmed nine classes of Deutsche Bank Securities COMM 2010-C1 commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The upgrades reflect an increase in credit enhancement (CE), the expectation of future paydown through loan amortization, and the stable performance of the underlying collateral pool. As the pool is concentrated with only 17 loans remaining, Fitch used a deterministic stress scenario in its analysis.

As of the April distribution, the pool's aggregate principal balance has been paid down by 59.5% to $347.3 million from $856.6 million at issuance. Fitch's base case modeled losses were 2.5% of the remaining pool and expected losses based on the original pool balance are 1.0%, with no losses realized to date. The transaction currently has two loans on the servicer watchlist (4.9%) but neither is considered a Fitch Loan of Concern, as the leasing issues at the properties appear to be resolved. The pool has increasing loan concentrations with only 17 of the original 42 loans outstanding. Retail properties collateralize 79.1% of the pool. The remaining loans consist of balloon maturities (100%) with final maturity dates in 2017 (1.5%) and 2020 (98.5%). There are no defeased loans.

The largest loan in the pool, Fashion Outlets of Niagara Falls (32.7% of the pool), is secured by a 525,663 square foot (sf) anchored retail center. The property is located approximately three miles southwest of Niagara Falls International Airport. The sponsor, Macerich, acquired the property in 2011. The property was significantly upgraded when a 175,000 sf expansion wing was opened in October 2014. The center has more than 200 different tenants with major tenants Saks Fifth Avenue Off 5th (3.87% of the net rentable area [NRA]) & Marshalls (5.14%) anchoring the collateral. Occupancy at the subject was 89% as of September 2015 compared to 94% at issuance. Although sales productivity decreased by 11% for the collateral portion of the center during 2014, the property's net operating income (NOI) was 33% higher than at issuance and the debt service coverage ratio (DSCR) was a strong 1.77x at year-end (YE) 2014.

The second largest loan, The Harrison (11.5%), is secured by a 95,360 sf retail and garage condominium located in the Upper West Side submarket of Manhattan. The condominium is located at the base of a 132-unit, 16-story luxury residential development. The sponsor, The Related Companies, developed, owns, and operates the retail and residential portions of the building. The major retail tenants, Pure Yoga and Equinox which combined represent 60.39% of the retail NRA, are on long-term leases that do not expire until 2030 and 2024, respectively. The space has been fully occupied since issuance with a stable DSCR of 1.58x as of YE 2015.

The third largest loan, Auburn Mall (11.2%), is secured by a 423,270 sf anchored retail center located in Auburn, MA approximately 50 miles southwest of downtown Boston. The mall has exhibited strong performance since issuance with occupancy averaging 99% during the life of the loan. The property's NOI has been consistent with the servicer-reported YE 2014 DSCR at 2.11x compared to 2.16x at issuance. The sponsor, Simon Property Group, recently received city approval to redevelop the former Macy's Home Goods anchor space to build a 12-screen movie theatre and restaurant in its place. Fitch will continue to monitor progress of the redevelopment plan and upcoming construction.

RATING SENSITIVITIES

The upgrades reflect a deterministic scenario which incorporated additional stress on the Fashion Outlets of Niagara Falls given the loan's significant concentration, as well as the overall retail and loan concentration. Although credit enhancement is high, the Outlooks on classes D through G remain Stable, as additional upgrades are not expected due to the concentrated nature of the pool and lack of projected near-term paydown. Further upgrades could be possible with significant unanticipated paydown or defeasance. Downgrades to the non-investment grades are possible if loans transfer to special servicing and/or expected losses increase significantly.

DUE DILIGENCE USAGE

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

Fitch has upgraded the following classes:

--$28.9 million class C to 'AAAsf' from 'AAsf', Outlook Stable;

--$45 million class D to 'Asf' from 'BBBsf', Outlook Stable.

Additionally, Fitch has affirmed the following classes:

--$18.9 million class A-2 at 'AAAsf', Outlook Stable;

--$179.5 million class A-3 at 'AAAsf', Outlook Stable;

--$112.7 million class XP-A at 'AAAsf', Outlook Stable;

--$197 million class XS-A at 'AAAsf', Outlook Stable;

--$197 million class XW-A at 'AAAsf', Outlook Stable;

--$24.6 million class B at 'AAAsf', Outlook Stable;

--$7.5 million class E at 'BBB-sf', Outlook Stable;

--$12.8 million class F at 'BBsf', Outlook Stable;

--$12.9 million class G at 'B-sf', Outlook Stable.

Classes A-1 and A-1D have paid in full. Fitch does not rate the interest-only class XW-B or the $17.1 million class H.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 28 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748781

Exposure Draft: Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 Apr 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=878412

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1004366

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1004366

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/20160512005780/en/

Fitch Ratings
Primary Analyst
Jay Bullie, CFA
Associate Director
1-312-368-2079
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: [email protected]

Source: Fitch Ratings

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