Fitch Affirms FUNBC 1999-C2

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has affirmed three classes of First Union National Bank-Chase Manhattan Bank Commercial Mortgage Trust (FUNC) commercial mortgage pass-through certificates series 1999-C2. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations reflect the high percentage of defeased collateral, low leverage of the remaining non-defeased loans and the high percentage of fully amortizing loans (68%). There are 25 loans remaining in the pool, 13 of which are defeased (52.2% of the pool). Fitch has designated one loan (5.5%) as a Fitch Loan of Concern, which is secured by a dark Rite Aid in Claremont, NH. Rite Aid vacated in 2008 and moved to a new location. The loan, however, has remained current.

As of the February 2016 distribution date, the pool's aggregate principal balance has been reduced by 97.8% to $26.6 million from $1.18 billion at issuance. Interest shortfalls are currently affecting classes M through N.

The largest non-defeased loan in the pool (8.9%) is backed by a 250-unit multifamily development located in Charlotte, NC. As of September 2015, the property was 97% occupied and the debt service coverage ratio was reported to be 1.41x.

Of the remaining 12 non-defeased loans, 11 are single-tenant properties representing 38.9% of the pool, including five loans with exposure to Rite Aid/Eckerd (23.9%; rated 'B', Rating Watch Positive by Fitch), four with Walgreens (9.2%; not rated by Fitch), one with CVS (2.8%), and one IHOP (3%).

RATING SENSITIVITIES

The Stable Outlook on the class K notes reflects Fitch's Outlook on the rating of the U.S. government as the class is fully covered by defeased collateral. Upgrades to class L are limited due to the concentration of loans in secondary and tertiary markets and the reliance on collateral backed by single-tenant retail properties. An upgrade to class L is possible if additional loans defease. Alternatively, a downgrade is possible if performance of the remaining collateral declines significantly.

DUE DILIGENCE USAGE

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

Fitch affirms the following classes as indicated:

--$6 million class K at 'AAAsf'; Outlook Stable;

--$11.8 million class L at 'BBB-sf'; Outlook Stable;

--$8.7 million class M at 'Dsf'; RE 90%.

The class A-1, A-2, B, C, D, E, F, G, H and J certificates have paid in full. Fitch does not rate the class N certificates. Fitch previously withdrew the rating on the interest-only class IO 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. 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=999946

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=999946

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/20160224006415/en/

Fitch Ratings
Primary Analyst
Daniel Anderson
Associate Director
+1-312-606-2305
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
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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