Fitch Affirms 7 World Trade Center

NEW DELHI--(BUSINESS WIRE)-- Fitch Ratings has affirmed all classes of New York Liberty Development Corporation, Liberty Revenue Refunding Bonds, series 2012 and 7 WTC Depositor, LLC Trust 2012-WTC (7 World Trade Center). A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmation is due to stable collateral performance since issuance.

The servicer-reported third-quarter 2015 net cash flow (NCF) debt service coverage ratio (DSCR) was 1.40x, compared to 1.39 at year-end (YE) 2014, 1.34x at YE 2013, and 1.23x at issuance.

The property was 98.8% occupied as of the September 2015 rent roll, compared to 98.4% at YE 2014 and YE 2013, and 95% at issuance. The top three tenants, combining for 66% of the total property square footage, all have lease expirations in 2022 and beyond, as well as additional lease renewal options. There is limited near-term rollover risk as only 1.2% of the net rentable area (NRA) rolls in 2016, 4.7% in 2017, 5.5% in 2018, and less than 1% in 2019.

The transaction represents a securitization of the beneficial leasehold mortgage interest in 7 World Trade Center, a 52-story, class A office building, totaling approximately 1.7 million square feet and located on the north end of the World Trade Center site in Downtown Manhattan. Loan proceeds were used to refinance the prior liberty bonds, pay closing costs, and return preferred equity investment to the sponsor, Larry A. Silverstein.

The liberty bonds and the commercial mortgage-backed security (CMBS) certificates follow a sequential pay structure and are administered pursuant to a traditional CMBS servicing agreement. Both loans are cross-defaulted and the liberty bonds have a priority in payment over the CMBS certificates. The liberty bonds and CMBS certificates are scheduled to amortize fully by their respective maturity dates following an initial interest-only period. The liberty bonds are interest-only for 16 years followed by full amortization by 2044. The CMBS bonds are interest-only for the first year followed by six-year full amortization. The one-year interest-only period for the CMBS bonds ended Apr. 5, 2014.

The current loan, totaling $518 million, includes a senior portion consisting of a $450.3 million tax-exempt liberty bond financing and a junior portion consisting of a $67.7 million CMBS loan. As of the December 2015 distribution date, the CMBS portion has amortized to $67.7 million from $125 million at issuance.

RATING SENSITIVITIES

All classes maintain Stable Outlooks. No rating actions are expected unless there are material changes in property occupancy or cash flow. Property performance remains consistent with issuance.

DUE DILIGENCE USAGE

No third-party due diligence was provided or reviewed in relation to this rating action.

Fitch has affirmed the following ratings:

--$18.5 million class 1 maturing on Sept. 15, 2028 at 'AAAsf'; Outlook Stable;

--$19.4 million class 1 maturing on Sept. 15, 2029 at 'AAAsf'; Outlook Stable;

--$20.4 million class 1 maturing on Sept. 15, 2030 at 'AAAsf'; Outlook Stable;

--$21.4 million class 1 maturing on Sept. 15, 2031 at 'AAAsf'; Outlook Stable;

--$22.5 million class 1 maturing on Sept. 15, 2032 at 'AAAsf'; Outlook Stable;

--$73.7 million class 1 maturing on Sept. 15, 2035 at 'AAAsf'; Outlook Stable;

--$137.2 million class 1 maturing on Sept. 15, 2040 at 'AAAsf'; Outlook Stable;

--$108 million class 2 at 'Asf'; Outlook Stable;

--$29.2 million class 3 at 'BBBsf'; Outlook Stable;

--$57.2 million class A at 'BBB-sf'; Outlook Stable;

--$10.5 million class B at 'BB+sf'; Outlook Stable.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions (pub. 27 Aug 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=870009

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

Related Research

Liberty Revenue Refunding Bonds, Series 2012 (7 World Trade Center Project) -- Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=674312

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=997601

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=997601

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160107006380/en/

Fitch Ratings
Primary Analyst
Melissa Che, +1-212-612-7862
Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
[email protected]

Source: Fitch Ratings

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