Fitch Affirms BACM 2005-1

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed 14 classes of Banc of America Commercial Mortgage Inc. commercial mortgage pass-through certificates, series 2005-1. A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

Although the remaining non-distressed classes have increasing credit enhancement, the affirmations are the result of adverse selection for the remaining collateral and the uncertainty about the ultimate resolution of the specially serviced assets. The transaction is highly concentrated with only four of the original 140 loans remaining, of which two (85% of the pool) are in special servicing. Fitch modeled losses of 48% of the remaining pool; expected losses on the original pool balance total 9.8%, including $149.2 million (6.2% of the original pool balance) in realized losses to date.

As of the June 2016 distribution date, the pool's aggregate principal balance has been reduced by 92.6% to $177 million from $2.4 billion at issuance. No loans are defeased. Interest shortfalls are currently affecting classes D through P. The two remaining performing loans mature in May 2018 and February 2020.

The largest specially serviced loan is The Mall at Stonecrest loan (53%), which is secured by the 396,840 square foot (sf) portion of a regional mall totalling 1.2 million sf located in Lithonia, GA, approximately 20 miles east of downtown Atlanta. The loan transferred to the special servicer in January 2013 for imminent payment default. Despite the transfer to the special servicer the loan remains current. The borrower has signed two new leases including 50,000 sf to Round 1, a bowling alley and arcade venue, and 20,700 sf to H&M. The collateral consists of a 16-screen AMC Theater, approximately 140 in-line tenants, a food court, kiosk space and strip space. As of year-end 2015, the mall had a collateral occupancy of approximately 88% and a total occupancy of 96%. The year-end 2015 NOI DSCR was 1.20x. The borrower was approved for a 24-month maturity extension until October 2016 to allow them to improve the property with additional capital provided by the sponsors and secure more favorable terms on the take-out financing.

The second largest specially serviced asset is Indian River Mall & Commons (32.2% of the pool). The real estate owned (REO) asset is secured by a 302,456 sf portion of the single-story 748,008 sf enclosed regional mall and a 132,121 sf portion of the adjacent 260,868 sf power center located in Vero Beach, FL. The loan, sponsored by Simon Property Group, Inc., transferred to special servicing in August 2014 and the borrower did not pay off the loan at the November 2014 maturity. Foreclosure occurred in May 2015. The overall mall was 88% occupied as of March 2016 and the in-line tenants and theater were 74% occupied. In fourth quarter 2015, The Commons, which is the adjacent power center, was separated from the mall and sold on April 21, 2016. Proceeds from the sale are being applied as principal paydown to the trust. Discussions are underway to attempt to renew the anchor tenant, AMC Theater, and then the mall will be marketed for sale.

RATING SENSITIVITIES

The Negative Outlooks for classes A-J and B reflect the uncertainty surrounding the The Mall at Stonecrest and The Indian River Mall and Commons and the possibility of increased losses as the pool is concentrated. Further downgrades to the remaining classes are possible should expected losses to the specially serviced loans increase, or realized losses on either specially serviced asset be higher than anticipated.

DUE DILIGENCE USAGE

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

Fitch affirms and revises Outlooks for the following classes as indicated:

--$30.3 million class A-J at 'Asf'; Outlook Negative;

--$61 million class B at 'Bsf'; Outlook to Negative from Stable;

--$20.3 million class C at 'CCsf'; RE 5%;

--$43.5 million class D at 'Csf'; RE 0%;

--$20.3 million class E at 'Csf'; RE 0%;

--$1.7 million class F at 'Dsf'; RE 0%;

--$0 class G at 'Dsf'; RE 0%;

--$0 class H at 'Dsf'; RE 0%;

--$0 class J at 'Dsf'; RE 0%;

--$0 class K at 'Dsf'; RE 0%;

--$0 class L at 'Dsf'; RE 0%;

--$0 class M at 'Dsf'; RE 0%;

--$0 class N at 'Dsf'; RE 0%;

--$0 class O at 'Dsf'; RE 0%.

The class A-1, A-2, A-1A, A-3, A-4, A-5, A-SB, FM-A through FM-D, and SM-A through SM-H certificates have paid in full. Fitch does not rate class SM-J, class LM, and class P certificates. Fitch previously withdrew the rating on the interest-only class XW certificates.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 16 Jun 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=882401

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

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

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1007922

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1007922

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/20160623006208/en/

Fitch Ratings
Primary Analyst
Darren Liss
Director
+1-212-908-0753
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Britt Johnson
Senior Director
+1-312-606-2341
or
Media Relations:
Sandro Scenga, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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