Fitch Affirms COMM 2012-CCRE2; Outlook Stable

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed 16 classes of German American Capital Corp.'s Wells Fargo Commercial Mortgage Trust (COMM) commercial mortgage pass-through certificates, series 2012-CCRE2. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations are primarily due to the overall stable pool performance since issuance. As of the June 2015 distribution date, the pool's aggregate principal balance has been reduced by 3.6% to $1.275 billion from $1.321 billion at issuance. Currently there are no specially serviced loans. Seven loans are on the servicer watchlist (12.5% of the pool), including the third largest loan (8.2%).

The transaction has a high office concentration of 52.2%. Of the pool, 40.4% of the loans are backed by properties located in major markets including New York City, Los Angeles, Chicago and Washington, DC.

The largest loan in the pool (8.9% of the pool) is secured by a 615,953 square foot (sf) office building located in downtown Los Angeles, CA. Per year-end (YE) 2014 rent roll, the property was 94.3% occupied, compared to 90.3% at YE2013 and 85.2% at issuance. There has been some tenant rollover since issuance; however, the largest tenant, L.A. Care, which occupies 25.6% of the property, has signed new leases to take over most of the vacated spaces due to continued expansion. The newly leased parcels are currently under construction. Upon completion, L.A. Care is expected to occupy approximately 40% of the net rentable area (NRA). The servicer-reported YE2014 debt service coverage ratio (DSCR) was 1.34x, increased from 1.25x from YE2013 but still below underwritten DSCR of 1.49x as a result of increased operating expenses.

The second largest loan (8.6%) is secured by an 11-story, 326,860 sf office property located in Washington, D.C. Per the YE2014 rent roll, the property was 100% occupied. Approximately 70% of the property is leased to Internal Revenue Service (IRS) and the Federal Retirement Thrift Investment Board (FRTIB) on long term leases. The servicer-reported YE2014 DSCR was 2.00x, compared to 1.69x at YE2013 and 1.63x at issuance.

The third largest loan (8.2%) is secured by two office properties totalling 923,277sf that are located in midtown Manhattan in New York, NY. Tenants include law firm McLaughlin & Stern (11.8% NRA, expiring 2021), Primedia (7.6% NRA, expiring 2017), and the Coca-Cola Company (5.5%, expiring 2022). The interest-only $105 million A-2 loan in this trust is pari passu with a $126 million A-1 note in the COMM 2012-CCR3 transaction. As of the 1Q15 rent roll, the property was 90.4% occupied, compared to 90% at YE2014 and 89% at issuance. On May 31, 2015, one of the buildings, 261 Madison Avenue, suffered a crane failure accident resulted in a 23,000 pound air conditioning unit falling nearly 30 stories, damaging exterior and interior components of the building on its descent. The Borrower has engaged construction firms to repair the damage and is also working with the insurance carrier. There is no estimated cost of the damage at this time. The servicer-reported 1Q 2015 DSCR was 2.02x, compared 1.75x at YE2014 and 2.03x at issuance.

RATING SENSITIVITIES

The Outlook remains Stable for all rated classes. No rating actions are expected unless there are material changes in property occupancy or cash flow.

Fitch affirms the following classes:

--$36 million class A-1 at 'AAAsf', Outlook Stable;

--$94.6 million class A-2 at 'AAAsf', Outlook Stable;

--$102 million class A-SB at 'AAAsf', Outlook Stable;

--$100 million class A-3 at 'AAAsf', Outlook Stable;

--$546.3 million class A-4 at 'AAAsf', Outlook Stable;

--$1 billion class X-A at 'AAAsf', Outlook Stable;

--$77.6 million class A-M at 'AAAsf', Outlook Stable;

--$52.8 million class A-M-PEZ at 'AAAsf', Outlook Stable;

--$37.3 million class B at 'AAsf', Outlook Stable;

--$25.4 million class B-PEZ at 'AAsf', Outlook Stable;

--$25.5 million class C at 'Asf', Outlook Stable;

--$17.4 million class C-PEZ at 'Asf', Outlook Stable;

--$23.1 million class D at 'BBB+sf', Outlook Stable;

--$51.2 million class E at 'BBB-sf', Outlook Stable;

--$23.1 million class F at 'BBsf', Outlook Stable;

--$23.1 million class G at 'Bsf', Outlook Stable.

Fitch does not rate the classes X-B, PEZ and H certificates.

Additional information is available at www.fitchratings.com.

Applicable Criteria

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

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

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (pub. 10 Dec 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608

Related Research

COMM 2012-CCRE2 -- Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686089

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=987628

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=987628

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/20150708006430/en/

Fitch Ratings
Primary Analyst
Amy Gan
Director
+1-212-908-9143
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Christopher Bushart
Senior Director
+1-212-908-0606
or
Media Relations
Sandro Scenga, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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