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Announcement:

Moody's Affirms The CMBS Ratings of FUNB 2001-C4

09 Mar 2011

Approximately $620 Million of Structured Securities Affected

New York, March 09, 2011 -- Moody's Investors Service (Moody's) affirmed the ratings of 16 classes of First Union National Bank Commercial Mortgage Trust Commercial Mortgage Trust Commercial Mortgage Pass-Through Certificates, Series 2001-C4 as follows:

Cl. A-2, Affirmed at Aaa (sf); previously on Dec 20, 2001 Definitive Rating Assigned Aaa (sf)

Cl. B, Affirmed at Aaa (sf); previously on Jun 2, 2005 Upgraded to Aaa (sf)

Cl. C, Affirmed at Aaa (sf); previously on Jun 2, 2005 Upgraded to Aaa (sf)

Cl. D, Affirmed at Aaa (sf); previously on Sep 25, 2006 Upgraded to Aaa (sf)

Cl. E, Affirmed at Aaa (sf); previously on Sep 25, 2006 Upgraded to Aaa (sf)

Cl. F, Affirmed at Aaa (sf); previously on Jul 9, 2007 Upgraded to Aaa (sf)

Cl. G, Affirmed at Aaa (sf); previously on Jul 9, 2007 Upgraded to Aaa (sf)

Cl. H, Affirmed at Aa1 (sf); previously on Sep 25, 2008 Upgraded to Aa1 (sf)

Cl. J, Affirmed at A1 (sf); previously on Aug 9, 2007 Upgraded to A1 (sf)

Cl. K, Affirmed at A3 (sf); previously on Aug 9, 2007 Upgraded to A3 (sf)

Cl. L, Affirmed at Ba1 (sf); previously on Sep 25, 2006 Upgraded to Ba1 (sf)

Cl. M, Affirmed at Ba3 (sf); previously on Dec 20, 2001 Definitive Rating Assigned Ba3 (sf)

Cl. N, Affirmed at B1 (sf); previously on Dec 20, 2001 Definitive Rating Assigned B1 (sf)

Cl. O, Affirmed at B2 (sf); previously on Dec 20, 2001 Definitive Rating Assigned B2 (sf)

Cl. P, Affirmed at B3 (sf); previously on Dec 20, 2001 Definitive Rating Assigned B3 (sf)

Cl. IO-I, Affirmed at Aaa (sf); previously on Dec 20, 2001 Definitive Rating Assigned Aaa (sf)

RATINGS RATIONALE

The affirmations are due to key parameters, including Moody's loan to value (LTV) ratio, Moody's stressed debt service coverage ratio (DSCR) and the Herfindahl Index (Herf), remaining within acceptable ranges. Based on our current base expected loss, the credit enhancement levels for the affirmed classes are sufficient to maintain their current ratings.

Moody's rating action reflects a cumulative base expected loss of 3% of the current balance. At last review, Moody's cumulative base expected loss was 2%. Moody's stressed scenario loss is 9% of the current balance. Moody's provides a current list of base and stress scenario losses for conduit and fusion CMBS transactions on moodys.com at http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF215255. Depending on the timing of loan payoffs and the severity and timing of losses from specially serviced loans, the credit enhancement level for investment grade classes could decline below the current levels. If future performance materially declines, the expected level of credit enhancement and the priority in the cash flow waterfall may be insufficient for the current ratings of these classes.

Moody's analysis reflects a forward-looking view of the likely range of collateral performance over the medium term. From time to time, Moody's may, if warranted, change these expectations. Performance that falls outside an acceptable range of the key parameters may indicate that the collateral's credit quality is stronger or weaker than Moody's had anticipated during the current review. Even so, deviation from the expected range will not necessarily result in a rating action. There may be mitigating or offsetting factors to an improvement or decline in collateral performance, such as increased subordination levels due to amortization and loan payoffs or a decline in subordination due to realized losses.

Primary sources of assumption uncertainty are the current sluggish macroeconomic environment and varying performance in the commercial real estate property markets. However, Moody's expects to see increasing or stabilizing property values, higher transaction volumes, a slowing in the pace of loan delinquencies and greater liquidity for commercial real estate in 2011 The hotel and multifamily sectors are continuing to show signs of recovery, while recovery in the office and retail sectors will be tied to recovery of the broader economy. The availability of debt capital continues to improve with terms returning toward market norms. Moody's central global macroeconomic scenario reflects an overall sluggish recovery through 2012, amidst ongoing individual, corporate and governmental deleveraging, persistent unemployment, and government budget considerations.

The principal methodology used in this rating was "CMBS: Moody's Approach to Rating Conduit Transactions" published in September 2000. In addition, Moody's publishes a weekly summary of structured finance credit, ratings and methodologies, available to all registered users of our website, at www.moodys.com/SF.QuickCheck.

Moody's review incorporated the use of the excel-based CMBS Conduit Model v 2.50 which is used for both conduit and fusion transactions. Conduit model results at the Aa2 level are driven by property type, Moody's actual and stressed DSCR, and Moody's property quality grade (which reflects the capitalization rate used by Moody's to estimate Moody's value). Conduit model results at the B2 level are driven by a pay down analysis based on the individual loan level Moody's LTV ratio. Moody's Herfindahl score (Herf), a measure of loan level diversity, is a primary determinant of pool level diversity and has a greater impact on senior certificates. Other concentrations and correlations may be considered in our analysis. Based on the model pooled credit enhancement levels at Aa2 and B2, the remaining conduit classes are either interpolated between these two data points or determined based on a multiple or ratio of either of these two data points. For fusion deals, the credit enhancement for loans with investment-grade credit estimates is melded with the conduit model credit enhancement into an overall model result. Fusion loan credit enhancement is based on the underlying rating of the loan which corresponds to a range of credit enhancement levels. Actual fusion credit enhancement levels are selected based on loan level diversity, pool leverage and other concentrations and correlations within the pool. Negative pooling, or adding credit enhancement at the underlying rating level, is incorporated for loans with similar credit estimates in the same transaction.

Moody's ratings are determined by a committee process that considers both quantitative and qualitative factors. Therefore, the rating outcome may differ from the model output.

The rating action is a result of Moody's on-going surveillance of commercial mortgage backed securities (CMBS) transactions. Moody's monitors transactions on a monthly basis through two sets of quantitative tools -- MOST® (Moody's Surveillance Trends) and CMM (Commercial Mortgage Metrics) on Trepp -- and on a periodic basis through a comprehensive review. Moody's prior full review is summarized in a press release dated August 9, 2007. Please see the ratings tab on the issuer / entity page on moodys.com for the last rating action and the ratings history.

DEAL PERFORMANCE

As of the February 14, 2011 distribution date, the transaction's aggregate certificate balance has decreased by 37% to $620 million from $978 million at securitization. The Certificates are collateralized by 106 mortgage loans ranging in size from less than 1% to 5% of the pool, with the top ten loans representing 30% of the pool. Twenty-six loans, representing 25% of the pool has defeased and is collateralized with U.S. Government securities. The pool has significant near-term refinance risk, as loans representing 75% of the pool mature within the next 24 months.

Thirty-six loans, representing 36% of the pool, are on the master servicer's watchlist. The watchlist includes loans which meet certain portfolio review guidelines established as part of the CRE Finance Council (CREFC) monthly reporting package. As part of our ongoing monitoring of a transaction, Moody's reviews the watchlist to assess which loans have material issues that could impact performance.

10 loans have been liquidated from the pool since securitization, resulting in an aggregate realized loss of $4.8 million (9% loss severity overall). At last review the pool had realized a $1.4 million loss. One loan, representing less than 1% of the pool, is currently in special servicing.

Moody's has assumed a high default probability for five poorly performing loans representing 12% of the pool and has estimated a $11 million aggregate loss (20% expected loss based on a 50% probability default) from these troubled loans.

Moody's was provided with full year 2009 operating results for 91% of the pool. Excluding specially serviced and troubled loans, Moody's weighted average LTV is 80% compared to 83% at Moody's prior review. Moody's net cash flow reflects a weighted average haircut of 10% to the most recently available net operating income. Moody's value reflects a weighted average capitalization rate of 9.0%.

Excluding specially serviced and troubled loans, Moody's actual and stressed DSCRs are 1.27X and 1.33X, respectively, compared to 1.31X and 1.35X 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.

Moody's uses a variation of Herf to measure diversity of loan size, where a higher number represents greater diversity. Loan concentration has an important bearing on potential rating volatility, including risk of multiple notch downgrades under adverse circumstances. The credit neutral Herf score is 40. The pool has a Herf of 39, compared to 45 at last review.

The top three loans represent 14% of the pool balance. The largest loan is the Overlook at Great Notch Loan ($31 million -- 5%), which is secured by a 415,000 square foot Class A office building located in Little Falls (Passaic County), New Jersey. Performance has declined considerably since last review. This decline can be attributed to a major tenant (ACS, 25% of net rentable area (NRA)) surrendering 10% of their lease and renewing the remaining 25% at a reduced rate, as well as another tenant (7% of of the NRA) delinquent on its rent. The loan matures in 2011. Moody's is concerned about refinance risk associated with this loan due to its near-term maturity and decline in performance. Moody's LTV and stressed DSCR are 133% and 0.81X respectively, compared to 96% and 1.12X at last review.

The second largest loan is the Orland Park Place Loan ($30 million -- 5%), which is secured by a 421,000 square foot power center located approximately 25 miles southwest of Chicago in Orland, Illinois. Current occupancy is 98% which is in line with last review, and the majority of tenants are on long term leases. Overall financial performance is in line with the previous review and securitization. The loan matures in 2011. Moody's LTV and stressed DSCR is 80% and 1.25X respectively, compared to 89% and 1.12X at last review.

The third largest conduit loan is the Chesterbrook Office Building Loan ($25 million -- 4%), which is secured by a 171,000 square foot Class A office building located in Berwyn, Pennsylvania, 20 miles northwest of the Philadelphia central business district. Property performance has declined since last review, largely due to increased vacancy, lower rental levels for recent leases, and increased expenses. The previous majority tenant, Nationwide (58% of the NRA) was replaced by True Position at a lower rental rate. In addition, a tenant which leased 11% of the NRA was evicted in 2009 and the space is still vacant. There are several lease proposals under discussion. The property was 80% leased as of September 2010 compared to 100% at last review. Repair and maintenance costs have also increased over several winters due to the increased costs for ice and snow removal, contributing to the poor performance. The loan matures in 2012. Moody's LTV and stressed DSCR is 83% and 1.28X respectively, compared to 71% and 1.49X at last review.

New York
Brad Kamedulski
Associate Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Keith Banhazl
Vice President - Senior Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Affirms The CMBS Ratings of FUNB 2001-C4
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

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All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

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Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

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MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

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