Fitch Upgrades 1 Class of WBCMT 2004-C12

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has upgraded one and affirmed nine classes of Wachovia Bank Commercial Mortgage Trust, (WBCMT) commercial mortgage pass-through certificates series 2004-C12. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrade reflects an increase in credit enhancement from scheduled amortization and paydown from maturing loans since Fitch's last rating action. The affirmations to the remaining classes reflect sufficient credit enhancement to offset Fitch modeled losses and portfolio concentration. There are 15 loans remaining out of the original 97 loans at issuance, of which 97% of the pool is secured by retail loans.

Fitch modeled losses of 10.4% of the remaining pool; expected losses on the original pool balance total 1.6%, including $9.7 million (0.9% of the original pool balance) in realized losses to date. Fitch has designated six loans (67.5%) as Fitch Loans of Concern, which includes one specially serviced asset (13.4%).

As of the April 2015 distribution date, the pool's aggregate principal balance has been reduced by 93.6% to $68.9 million from $1.08 billion at issuance. Per the servicer reporting, one loan (3% of the pool) is defeased. Interest shortfalls are currently affecting classes N through P.

The largest contributor to expected losses is the The Mall at Waycross, a specially-serviced loan (13.4% of the pool), which is secured by 380,982 square foot (sf) retail property located in Waycross, GA. The largest three tenants are Sears, JC Penney, and Belk. The loan transferred to special servicing in May 2014 for imminent maturity default as a result of the borrower's inability to refinance the loan due to property level issues.

As of the May 2015 rent roll, the property is 77% occupied, compared to 94.2% at issuance. The majority of the occupancy decline was associated with Sears (23%) closing its store in February 2010. The Sears lease expires in March 2020 and the space remains dark. According to the May 2015 rent roll, the near-term lease rollover risk includes 12% in 2015, and 48% in 2016. The property is anchored by JC Penney and Belk, both with lease expirations in August 2016. Per the special servicer, they are currently in negotiations with both tenants and expect lease renewals. The next two largest tenants are Staples, whose lease expired in February 2015 and the Georgia Theatre Corporation with a lease expiration in August 2016. The special servicer continues with leasing efforts at the property before disposition in 3rd quarter (3Q) 2015.

The next largest contributor to expected losses is the Great American Plaza Retail Center loan (5.8%), which is secured by 20,431 sf unanchored retail center, located in Las Vegas, NV. The largest tenants at the property are Vegas Treasures (32%), Adore Salon and Spa (19%), and Nothing But Bundt Cakes (15%). As of December 2014, occupancy declined to 94.4% from 100% as of year-end (YE) 2013. The most recent reported DSCR as of the September 2014 is 1.11x. Per the master servicer, the decline in performance is due to a decrease in average rental rates and increased utilities and repair/maintenance expenses. The anticipated repayment date of 5/11/2014 passed; a lockbox has been established, and the loan is now cash managed.

The third largest contributor to expected losses is the Food Lion - Ormond Beach, FL loan (1.4%), which is secured by a 26,640 sf Food Lion grocery retail property located in Ormond Beach, FL. The subject is located in a heavily developed tourist area 3 miles north of Daytona Beach. The single tenant, Food Lion, vacated at lease expiration in March 2014. The borrower remains current on debt service and continues to market the vacant space with no current prospects. Per the master servicer, the borrower is asking $13 per square foot (psf) for the space and is currently not offering any concessions.

RATING SENSITIVITIES

Rating Outlooks on classes E through G remain Stable due to increasing credit enhancement and continued paydown. The Negative Outlooks on classes L and M reflect the pool's increasing concentration, smaller tranche sizes, and the potential for further declines in performance with some of the larger retail loans located in tertiary markets with weaker tenants and/or rollover risk.

Fitch upgrades the following classes as indicated:

--$4.3 million class E to 'AAAsf' from 'AAsf'; Outlook Stable.

Fitch affirms the following classes but assigns or revises Rating Outlooks and REs as indicated:

--$13.3 million class H at 'BBB-sf'; Outlook to Stable from Negative;

--$4 million class J at 'BBsf'; Outlook to Stable from Negative;

--$2.7 million class K at 'BBsf'; Outlook to Stable from Negative;

--$2.7 million class O at 'CCCsf'; RE 70%.

Fitch affirms the following classes as indicated:

--$12 million class F at 'Asf'; Outlook Stable;

--$12 million class G at 'Asf'; Outlook Stable;

--$5.3 million class L at 'Bsf'; Outlook Negative;

--$4 million class M at 'B-sf'; Outlook Negative;

--$2.7 million class N at 'CCCsf'; RE 100%.

Classes A1, A-1A, A-2, A-3, A-4, B, C, D, and MAD have paid in full. Fitch does not rate the class P certificates. Fitch previously withdrew the rating on the interest-only class IO certificates.

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 10, 2014 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at 'www.fitchratings.com' under the following headers:

Structured Finance >> CMBS >> Criteria Reports

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (Aug. 4, 2014);

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

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria - Effective from 4 August 2014 to 31 March 2015

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

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

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=984547

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.

Fitch Ratings
Primary Analyst
Lisa Cook, +1-212-908-0665
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, New York
Sandro Scenga, +1-212-908-0278
[email protected]

Source: Fitch Ratings

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