Recent CMBS ratings news
By PATRICK CROWLEY
10/24/2003

Fitch Ratings has issued a stern warning to commercial mortgage-backed securities (CMBS) special servicers: Play fair or else.

In a statement, Fitch said that recently "there has been considerable discussion among CMBS participants concerning the motive behind asset resolutions and the creativity of the actual workout that affects all parties in the transaction." Fitch encourages special servicers to "investigate and pursue all available actions when resolving a non-performing asset, including actively pursuing all legal remedies.

"However, Fitch is concerned when a special servicer, based on its role in the transaction, creates self-serving revenue-garnering opportunities through excessive litigation, and/or opportunistic servicing by unnecessarily transferring assets into special servicing."

Stephanie Petosa, a Fitch senior director, said in the statement that "opportunistic servicing should not be practiced by any rated CMBS servicer. Those CMBS special servicers that don't play fair and have demonstrated this type of behavior may find their Fitch servicer rating adversely impacted."

Fitch upgraded and affirmed classes of Morgan Stanley Capital I Inc.s $852 million CMBS series 1999-WFI, with ratings ranging from 'AAA' to 'BB' reflecting the continued strong performance of the pool and the 11% reduction in collateral balance since issuance.

Fitch affirmed ratings of COMM's $857.2 million commercial mortgage pass-through certificates series 200-C1 at 'AAA' through 'CCC'. The affirmations reflect consistent loan performance and minimal reduction of the pool collateral. The weighted average debt service coverage ratio (DSCR) is 1.33 times (x) compared to 1.36x at issuance.

Ratings on classes C, D, E and F of J.P. Morgan Commercial Mortgage Finance Corp.'s mortgage pass-through certificates were raised by Standard & Poor's Ratings Services (S&P). In addition, classes A-2, A2X, B and G were affirmed. The ratings reflect a 36% paydown in certificates since the last rating change in June of 2001 and a 52% paydown since issuance. The DSCR remains relatively stable at 1.75x, compared to 1.78x at the last rating change.

S&P also took action on Asset Securitization Corp.'s series 1995-MDIV, raising its rating on Class A5 from 'BBB-' to 'AA-' and removing it from CreditWatch negative, where it was placed in late February. Also, the rating on class A-4 was raised from 'BBB+' to 'AA' and while class A-1 was affirmed at 'AAA'. The actions follow the payoff of two specially serviced loans -- Hardage and Motels of America -- and reflect the performance and credit quality of the pool's remaining loans, which have a DSCR of 2.23x, up from 1.83x at issuance.

The news is worse for the $53.2 million DLJ Commercial Mortgage Trust 2000-CKP1. Moody's Investors Services is reviewing four classes of the issue for possible downgrade over concerns about the pool's performance and potential losses of specially serviced loans. Five loans -- 2.5% of the outstanding loan balance -- are in special servicing while three loans have been liquidated resulting in aggregate realized losses of $4.4 million.

But Moody's upgraded two classes and affirmed five others in the $1.5 billion First Union Lehman Brothers Commercial Mortgage Trust II commercial mortgage pass-through certificates Series 1997-C2. The upgrades went from 'Aa2' to 'Aa1' and from 'A2' to 'A1' while the affirmations came in at a range of 'Aaa' to 'Baa3.' The loan-to-value (LTV) ratio of the issue's conduit component is 90.8%, compared to 83.7% at origination. Just 5.8% of the loans are in special servicing.

Under review by Moody's for possible downgrade are ratings of the $385.4 million Winn-Dixie Pass-Through Trust Certificates Series 1991-1. The certificates are now rated 'Ba2' but may be downgraded because Winn-Dixie Stores Inc.'s issuer rating was placed on review for possible downgrade on Oct. 9.

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