Fitch Affirms ICOT 2013-IRV

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed five classes of Irvine Core Office Trust 2013 - IRV (ICOT 2013-IRV) commercial mortgage pass through certificates. A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The affirmations reflect the stable performance and strong overall occupancy of the assets in the pool, which consist of 10 non cross-collateralized loans secured by office buildings located in Southern California. The loans are all sponsored by Irvine Core Office, LLC, an affiliate of Irvine Company.

As of the March 2016 distribution date, the pool's aggregate certificate balance declined 5.8% to $824.5 million from $874.9 million at issuance due to scheduled amortization.

Fitch reviewed the most recent available financial performance of the collateral. The servicer-reported trailing 12 month (TTM) June 2015 net cash flow (NCF) debt service coverage ratio (DSCR) was 2.04x. As of the year-end (YE) 2015 rent rolls, the portfolio was 95.7% occupied compared with 92.6%, as of January 2015. Over the next year, there is approximately 15% tenant roll across the properties. The portfolio includes one Fitch Loan of Concern (8.8% of the pool).

The transaction is concentrated. The top three loans comprise 51.7% of the pool. The collateral quality is considered above average. In its analysis and similar to Issuance, Fitch applied stressed capitalization rates lower than the typical office range to three of the properties, which are considered market leaders.

The largest loan in the pool (22.2%) is secured by Fox Plaza, a 730,510 sf office property located in Century City, CA. The property serves as the headquarters of 20th Century Fox (60.3% of NRA through 2026), whose movie lot sits adjacent to the property. Built in 1987 and renovated in 2012. The property is LEED Gold certified with state of the art systems throughout the building. As of the December 2015 rent roll, occupancy improved slightly to 98% (compared to 95.6% (January 2015) and 87.3% (December 2013)). There is approximately 12.6% total tenant roll over the next 12 months.

The Fitch Loan of Concern (8.8%) is an 18 story office property located in Newport Beach, CA. The 286,000 sf property was built in 1972 and renovated in 2003. The largest tenant, O'Melveny & Meyers, renewed its lease for 10 years through 2025; however, it downsized by approximately 15,000 sf. As of the YE 2015 rent roll, occupancy had dropped to 79.3% from 87.5% in January 2015. Further, there is approximately 17% tenant roll over next year.

The portfolio has experienced sponsorship in Irvine Core Office LLC, an affiliate of Irvine Company (Irvine), which is the largest owner and manager of commercial real estate in California. Irvine's portfolio, which is primarily located in Southern California, includes approximately 480 office buildings, 140 multifamily properties, 41 retail properties, and three resorts.

RATING SENSITIVITIES

The affirmations reflect the stable performance and strong overall occupancy of the assets in the pool. Class C could be subject to upgrade should performance continue to be stable or improve while amortization continues. Downgrades to all classes are possible should the loans' performance substantially decline.

Fitch will continue to monitor any significant occupancy changes as tenants roll over the next year.

DUE DILIGENCE USAGE

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

Fitch has affirmed the following classes:

--$148.6 million class A-1 at 'AAAsf'; Outlook Stable;

--$361 million class A-2 at 'AAAsf'; Outlook Stable;

--$148.6 million* class X-A at 'AAAsf'; Outlook Stable;

--$88.4 million class B at 'AAAsf'; Outlook Stable;

--$88.4 million class C at 'Asf'; Outlook Stable.

*Interest only and notional amount

Fitch does not rate classes D through F.

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

Irvine Core Office Trust 2013-IRV -- Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708745

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1001821

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1001821

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/20160331006379/en/

Fitch Ratings
Primary Analyst
Stacey McGovern
Director
+1-212-908-0722
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Sandro Scenga, +1-212-908-0278
[email protected]

Source: Fitch Ratings

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