Recent CMBS ratings news
By PATRICK CROWLEY
10/7/2003

Fitch Ratings has unleashed "new, rigorous" operating statement reporting benchmarks for commercial mortgage-backed securities (CMBS) servicers. "Operating statement analysis is an important facet of Fitch's post issuance surveillance of CMBS transactions," Fitch Director Richard Carlson, said in a statement. "For 2003, Fitch Ratings set new, rigorous operating statement benchmarks for both primary and master servicers."

Fitch said it will continue to "look at three distinct but equally important aspects regarding property level operating statements -- collection, analysis and reporting." As of May 31 the primary servicer weighted average collection rate for 2002 year-end statements was 93.2%, below the new Fitch benchmark collection rate of 95%. Master servicers "as a group did not perform as well," collecting a weighted average of 77.8%, Fitch reported. That is below the category's 90% benchmark. The weighted average reporting rate for primary services was 94.7% as of July 31, just below the 95% benchmark. The reporting rate for master services came in at 92.1%, which beat the Fitch's 90% benchmark.

Fitch also reported that it has downgraded Office Portfolio Trust's $45.6 million commercial mortgage pass-through certificates series 2001-HRPT, with ratings now at 'BBB+', 'BBB' and 'BBB-'. The downgrades reflect a decline in Fitch's adjusted net cash flow and concerns about the large amount of tenant exposure in the Austin, TX, market. Overall portfolio occupancy as of August was 83.4%, compared to 98.9% in September of 202 and 97.3% at issuance. In August the outstanding principal balance was $252.9 million, a 2.7% reduction due to amortization the loan. Fitch also affirmed nine classes.

Classes A and AX of Morgan Stanley Capital I. Inc. $225 million mortgage pass-through certificates series 1997-FF1 have been downgraded to 'A3' from 'Aa2' by Moody's Investors Services because of a long-term office lease to the Fireman's Fund Insurance Company. In July the financial strength of Fireman's Fund was downgraded by Moody's to 'A2'. Because Moody's considers a lease obligation the same as an unsecured debt, it is considered inferior to an insurance company's policy holders' claims. "This results in an unsecured debt rating one notch below the insurance financial rating strength, resulting in the downgrade of Classes A and AX to 'A'." The certificates are secured by two mortgages collateralized by a 711,000-square-foot office complex in Navato, Calif., that serves as Fireman's Fund corporate headquarters.

The ratings of Prudential Mortgage Capital Company II $238.5 million commercial mortgage pass-through certificates Series PRU-HTG 2000-C1 have been affirmed by Moody's ranging from 'Aaa' to 'Baa3'. Collateral consists of first priority mortgage liens on the fee and leasehold interests in 29 neighborhood and community shopping centers of 4.7 million square feet. Total occupancy rate as of May was 86.8% compared to 94% at securitization. The loan-to-value ratio is 73.9% compared to 72% at securitization.

Credit Suisse First Boston Mortgage Securities Corp. $25.1 million commercial mortgage pass-through certificates series 1999-C1 may be downgraded by Moody's. Under review are Class L, rated 'B2' and Class M rated 'B3'. Eight loans representing 10% of the pool are in special servicing, 40 loans representing 21.1% of the pool are on the servicer's watchlist and two loans have been liquidated, resulted in aggregate realized losses of $4.1 million.

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