Moody's Upgrades Seven Classes and Downgrades One Class of First Union National Bank-Chase Manhattan Bank Commercial Mortgage Trust, Series 1999-C2
Approximately $884.3 Million of Structured Securities Affected
New York, October 26, 2006 -- Moody's Investors Service upgraded the ratings of seven classes,
downgraded the rating of one class and affirmed the ratings of five classes
of First Union National Bank-Chase Manhattan Bank Commercial Mortgage
Trust, Commercial Mortgage Pass-Through Certificates,
Series 1999-C2 as follows:
-Class A-2, $600,773,142,
Fixed, affirmed at Aaa
-Class IO, Notional, affirmed at Aaa
-Class B, $47,260,093, Fixed,
affirmed at Aaa
-Class C, $62,028,874, Fixed,
upgraded to Aaa from Aa2
-Class D, $14,768,779, Fixed,
upgraded to Aaa from Aa3
-Class E, $41,352,582, Fixed,
upgraded to Aaa from A3
-Class F, $17,722,535, Fixed,
upgraded to Aa2 from Baa2
-Class G, $41,352,582, Fixed,
upgraded to Baa2 from Ba2
-Class H, $11,815,024, Fixed,
upgraded to Ba1 from Ba3
-Class J, $11,815,023, Fixed,
upgraded to Ba3 from B1
-Class K, $11,815,024, Fixed,
affirmed at B3
-Class L, $11,815,023, Fixed,
affirmed at Caa1
-Class M, $11,815,024, Fixed,
downgraded to Caa3 from Caa2
As of the October 17, 2006 distribution date, the transaction's
aggregate certificate balance has decreased by approximately 24.5%
to $892.4 million from $1.2 billion at securitization.
The Certificates are collateralized by 181 mortgage loans secured by commercial
and multifamily properties. The pool includes a conduit component,
representing 93.5% of the pool, and a credit tenant
lease (CTL) component, representing 6.5% of the pool.
The loans range in size from less than 1.0% of the pool
to 4.8% of the pool, with the top 10 loans representing
25.5% of the pool. Forty-four loans,
representing 31.4% of the pool, have defeased and
are secured by U.S. Government securities. Thirty-six
loans have been liquidated from the pool, resulting in aggregate
realized losses of approximately $12.6 million.
Three loans, representing 1.1% of the pool,
are in special servicing. Moody's estimates aggregate losses of
approximately $3.6 million for all of the specially serviced
loans. Moody's was provided with full-year 2005 and partial-year
2006 operating results for 89.8% and 51.4%
respectively, of the performing loans in the pool. Moody's
loan to value ratio ("LTV") for the conduit component is 81.6%,
compared to 92.1% at last review in April 2006 and compared
to 89.1% at securitization.
Moody's is upgrading Classes C, D, E, F,
G, H, and J primarily due to a large percentage of defeased
loans and improved pool performance. Moody's is downgrading
Class M due to realized losses and expected losses from the specially
The top three loans represent 11.9% of the outstanding pool
balance. The largest loan is the Sheraton Suites Portfolio Loan
($42.8 million - 4.8%), which
is secured by three full service hotels totaling 732 guestrooms.
The properties are located in Delaware, Illinois and Texas.
The sponsor of the borrowing entity is Starwood Hotels and Resorts and
International Hotel Ventures. The weighted average RevPAR is $86.84
(second quarter 2006), compared to $67.76 for calendar
year 2004 and compared to $80.79 at securitization.
The loan is on the master servicer's watchlist due to debt service
coverage below 1.2x at the Illinois and Texas properties.
Moody's LTV is 87.2%, compared to greater than 100.0%
at last review and compared to 86.2% at securitization.
The second largest loan is the Olen Portfolio Loan ($34.6
million - 3.9%), which is secured by five office/industrial
properties and one office building, located in Orange County,
California. The properties total 609,000 square feet.
The property is 97.8% occupied, compared to 84.0%
at last review and compared to 99.0% at securitization.
Moody's LTV is 86.2%, compared to 91.8%
at last review and compared to 96.1% at securitization.
The third largest loan is the Lakeside Apartments Loan ($28.6
million - 3.2%), which is secured by a 461-unit
luxury apartment complex located approximately 40 miles southwest of Atlanta
in Newnan, Georgia. The property is 94.0% occupied,
compared to 91.0% at last review and compared to 93.0%
at securitization. The loan is on the master servicer's watchlist
due to debt service coverage below 1.1x. Moody's LTV is
88.1%, compared to 92.6% at last review
and compared to 93.2% at securitization.
The CTL component includes 26 loans secured by properties under bondable
leases. The largest exposures include Accor SA (26.7%
of the CTL component), CVS (17.5%; Moody's senior
unsecured rating Baa2 -- stable outlook) and Rite Aid Corporation
(15.9%; Moody's senior unsecured rating Caa1 --
on review for possible downgrade).
The pool's collateral is a mix of U.S. Government securities
(31.4%), retail (19.8%), multifamily
(17.3%), office (11.0%), hotel
(9.0%), CTL (6.5%), industrial
(2.7%) and healthcare (2.3%). The collateral
properties are located in 34 states. The highest state concentrations
are California (14.5%), Georgia (10.9%),
Texas (10.8%), Pennsylvania (8.4%) and
North Carolina (6.2%). All the loans are fixed rate.
Structured Finance Group
Moody's Investors Service
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service