Approximately $20.5 Million of Structured Securities Affected
New York, May 01, 2014 -- Moody's Investors Service affirmed the rating of one class and downgraded
one Class of Banc of America Commercial Mortgage Inc. Commercial
Mortgage Pass-Through Certificates, Series 2001-1
as follows:
Cl. K, Downgraded to C (sf); previously on May 9,
2013 Affirmed Ca (sf)
Cl. X, Affirmed Caa3 (sf); previously on May 9,
2013 Affirmed Caa3 (sf)
RATINGS RATIONALE
The rating of Class K was downgraded due to higer realized and anticipated
losses and from specially serviced and troubled loans. The rating
of the IO Class, Class X, is consistent with the expected
credit performance of its referenced classes and is affirmed.
Due to the payment priority of the IO class, Class K has not received
principal payments since the December 2012 remittance date. In
addition, as of the most recent remittance date, Class K has
experienced cumulative interest shortfalls totaling $2.5
million. Moody's anticipates that the pool will continue to experience
interest shortfalls caused by specially serviced loans. Interest
shortfalls are caused by special servicing fees, including workout
and liquidation fees, appraisal subordinate entitlement reductions
(ASERs), loan modifications, extraordinary trust expenses
and non-advancing by the master servicer based on a determination
of non-recoverability.
Moody's rating action reflects a base expected loss of 70.0%
of the current balance, the same as at last review. Moody's
base expected loss plus realized losses is 6.5% of the original
pooled balance, the same as at last review. Moody's
provides a current list of base expected losses for conduit and fusion
CMBS transactions on moodys.com at http://v3.moodys.com/viewresearchdoc.aspx?docid=PBS_SF215255.
FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING:
The performance expectations for a given variable indicate Moody's forward-looking
view of the likely range of performance over the medium term. Performance
that falls outside the given range can indicate that the collateral's
credit quality is stronger or weaker than Moody's had previously expected.
Factors that could lead to an upgrade of the ratings include a significant
amount of loan pay downs or amortization, an increase in the pool's
share of defeasance or an improvement in pool performance.
Factors that could lead to a downgrade of the ratings include a decline
in the performance of the pool, loan concentration, an increase
in realized and expected losses from specially serviced and troubled loans
or interest shortfalls.
METHODOLOGY UNDERLYING THE RATING ACTION
The principal methodology used in this rating was "Moody's Approach to
Rating CMBS Large Loan/Single Borrower Transactions" published in
July 2000. Please see the Credit Policy page on www.moodys.com
for a copy of this methodology.
DESCRIPTION OF MODELS USED
Moody's uses a variation of Herf to measure the diversity of loan
sizes, where a higher number represents greater diversity.
Loan concentration has an important bearing on potential rating volatility,
including the risk of multiple notch downgrades under adverse circumstances.
The credit neutral Herf score is 40. The pool has a Herf of two,
the same as at last review.
When the Herf falls below 20, Moody's uses the excel-based
Large Loan Model v 8.7 and then reconciles and weights the results
from the conduit and large loan models in formulating a rating recommendation.
The large loan model derives credit enhancement levels based on an aggregation
of adjusted loan-level proceeds derived from Moody's loan-level
LTV ratios. Major adjustments to determining proceeds include leverage,
loan structure, property type and sponsorship. Moody's
also further adjusts these aggregated proceeds for any pooling benefits
associated with loan level diversity and other concentrations and correlations.
However, since 97% of the pool is in special servicing,
Moody's also utilized a loss and recovery approach in this review.
In this approach, Moody's determines a probability of default for
each specially serviced loan and determines a most probable loss given
default based on a review of broker's opinions of value (if available),
other information from the special servicer and available market data.
The loss given default for each loan also takes into consideration servicer
advances to date and estimated future advances and closing costs.
Translating the probability of default and loss given default into an
expected loss estimate, Moody's then applies the aggregate loss
from specially serviced loans to the most junior class(es) and the recovery
as a pay down of principal to the most senior class(es).
DEAL PERFORMANCE
As of the April 15, 2014 distribution date, the transaction's
aggregate certificate balance has decreased by 98% to $20.5
million from $948.1 million at securitization. The
certificates are collateralized by four mortgage loans ranging in size
from 3% to 68% of the pool with the largest loan constituting
68% of the pool.
Fifty-four loans have been liquidated from the pool resulting in
an aggregate realized loss of $46.9 million (16%
average loan loss severity). There are no loans on the master servicer's
watchlist.
There are three loans, representing 97% of the pool,
in special servicing. The largest specially serviced loan is the
Waretech Industrial Park Loan ($13.9 million --
68% of the pool). The loan is secured by a 673,000
square foot industrial facility built in 1955 and located in Grand Blanc,
Michigan. The property was formerly occupied by General Motors.
The loan transferred to special servicing in 2009 due to imminent monetary
default and became real estate owned (REO) in May 2011. The loan
was deemed non-recoverable by the master servicer in August 2011
and based on the most recent remittance statement has accumulated approximately
$682,228 in cumulative advances and ASERs. The property
has experienced leasing activity increasing occupancy to 96% leased
as of March 2014, however most leasing has been on a short-term
or month-to-month basis. The largest tenant,
representing 66% of the net rentable are (NRA), has a lease
expiration in June 2015. The special servicer is currently formulating
a disposition strategy for this loan.
The second largest specially serviced loan is the Suburban Acres-Rapid
Estates Loan ($4.8 million -- 23.5% of
the pool) which is secured by two mobile home properties totaling 326
pads and located in Lockport, New York. The loan transferred
to special servicing in April 2010 due to imminent default and a receiver
was appointed in 2012. The loan has been delinquent since May 2011
and was deemed non-recoverable by the master servicer in August
2011. As of March 2013, the property was 63% leased,
which is the same as last review. The special servicer foreclosed
in July 2013.
The third largest specially serviced loan is the Flinn Springs mobile
home property Loan ($1.2 million -- 5.7%
of the pool) which is secured by a 50 pad mobile home property in Flinn
Springs, California. The loan transferred to special servicing
in March 2011 due to a maturity default and the borrower declared bankruptcy
soon thereafter. The special servicer negotiated a term extension
through February 2016.
The master servicer has recognized an aggregate appraisal reduction of
$9.3 million on the three specially serviced loans.
Moody's estimates an aggregate $14.3 million loss for these
specially serviced loans (72% expected loss on average).
The sole performing loan in the pool is the Downtown Mini Storage Loan
($646,462 -- 3.2% of the pool).
The loan is secured by a 100,000 square foot self storage facility
located near downtown Los Angeles, California. Moody's was
provided with full-year 2011 and 2012 operating results for this
loan. The loan has been a consistent strong performer. The
loan is fully amortizing and matures in February 2016. Moody's
current LTV and stressed DSCR are 7% and 14.5X, respectively,
compared to 12% and 8.6X at last review. Moody's
actual DSCR is based on Moody's net cash flow (NCF) and the loan's actual
debt service. Moody's stressed DSCR is based on Moody's NCF and
a 9.25% stressed rate applied to the loan balance.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and
sensitivity analysis, see the sections Methodology Assumptions and
Sensitivity to Assumptions of the disclosure form.
Moody's did not receive or take into account a third-party
assessment on the due diligence performed regarding the underlying assets
or financial instruments related to the monitoring of this transaction
in the past six months.
The analysis includes an assessment of collateral characteristics and
performance to determine the expected collateral loss or a range of expected
collateral losses or cash flows to the rated instruments. As a
second step, Moody's estimates expected collateral losses or cash
flows using a quantitative tool that takes into account credit enhancement,
loss allocation and other structural features, to derive the expected
loss for each rated instrument.
In rating this transaction, Moody's used a cash flow model
to model cash flow stress scenarios to determine the extent to which investors
would receive timely payments of interest and principal in the stress
scenarios, given the transaction structure and collateral composition.
Moody's did not use any stress scenario simulations in its analysis.
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Gregory Reed
Vice President - Senior Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Keith Banhazl
VP - Sr Credit Officer/Manager
Structured Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's Affirms One and Downgrades One Class of BACM 2001-1
