Fitch Ratings Upgrades Midland RAC Series 1996-C1.Business Editors CHICAGO--(BUSINESS WIRE)--May 8, 2003 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. upgrades Midland Realty Acceptance Corp.'s, commercial mortgage pass-through certificates Pass-Through Certificates (PTCs) are instruments that evidence the ownership of two or more Equipment Trust Certificates. In other words, Equipment Trust Certificates may be bundled into a pass-through structure as a means of diversifying the asset pool and/or increasing the size , series 1996-C1 as follows: $26 million class C to 'AAA' from 'AA'; $14.8 million class D to 'AA' from 'A'; $5.6 million class E to 'A+' from 'BBB+'; $7.4 million class F to 'A' from 'BBB'; and $18.6 million class G to 'BBB' from 'BB'. In addition, Fitch affirms the following classes: $45.6 million class A-3, interest-only class A-EC and $20.4 million class B at 'AAA'; and $11.1 million class J at 'B'. The $5.6 million class H, $8 million principal-only class K-1, and interest-only class K-2 are not rated by Fitch. The rating upgrades and affirmations follow Fitch's review of the transaction, which closed in September 1996. The upgrades are attributed to a 30% collateral paydown since Fitch's previous review in September 2002 resulting in increased subordination levels. As of the April 2003 distribution date, the transaction's aggregate principal balance has decreased approximately 56% to $163.2 million from $371.1 million at issuance. The Master Servicer, Midland Loan Services (Midland), collected yearend (YE) 2002 operating statements for approximately 62% of the loans remaining in the pool. The YE 2002 weighted-average debt service coverage ratio The debt service coverage ratio (DSCR), or debt service ratio, is the ratio of net operating income to debt payments on a piece of investment real estate. It is a popular benchmark used in the measurement of an income-producing property’s ability to produce (DSCR DSCR See: Debt-service coverage ratio ) is 1.79 times (x) compared to 1.70x for YE 2001 and 1.37x at issuance for all available loans. Eleven loans (11.5%) are currently in special servicing, including two that are real estate owned Real Estate Owned Property owned by a lender - usually a bank - after an unsuccessful sale at a foreclosure auction. This is common because most of the properties up for sale at these auctions are worth less than the total amount owed to the bank: the minimum bid in most (REO reo Noun NZ a language [Maori] ). The two REO loans (3.4%) are health care properties. Another specially serviced loan (2.4%) is secured by a single tenant retail property previously occupied by Kmart. Fitch assumed the specially serviced loans will incur losses totaling $3 million. In addition, three loans (7.4%) on Midland's watchlist are of concern to Fitch due to tenants in bankruptcy. The certificates are collateralized by 79 fixed-rate mortgage loans, consisting primarily of retail (36%), multifamily (33%), office (9%), and industrial (7%) properties, with significant concentrations in Texas (13%), New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of (9%), Ohio (9%), and Puerto Rico (8%). The upgrades reflect collateral paydown while taking into consideration the expected losses, specially serviced loans, and watchlist loans. Fitch will continue to monitor the performance of this transaction. |
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