Fitch Upgr KPAC Series 1994-C3 $72.4MM Comm Mtge P-T Ctfs.Business Editors NEW YORK--(BUSINESS WIRE)--Dec. 19, 2001 Kidder Peabody Acceptance Corporation I'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 1994-C3, $33.1 million class B is upgraded to `AAA' from `AA+' by Fitch. In addition, the $39.3 million class C is upgraded to `AA' from `AA-'. Since last year's review, the ratings on classes A-2 and A-2X have been withdrawn because the certificates have been paid in full. The rating actions follow Fitch's annual review of the transaction, which closed in November 1994. The upgrades are primarily attributable to the strong pool performance and significant increases in subordination levels, mainly due to amortization and prepayments. As of the December 2001 distribution date, the outstanding collateral balance has been reduced to $72.4 million from $226.5 million at closing. Of the original 29 cross-collaterallized and cross-defaulted properties in the pool, 12 are outstanding. The pool's collateral is concentrated in Georgia (32%), Texas (23%) and Michigan (11%) and consists mostly of office (52%), multifamily (30%) and retail (14%) properties. There are currently no delinquent loans in the pool. The 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 ) for year end (YE) 2000, when compared to closing, has increased from 1.76 times (x) to 6.33x on class B and from 1.45x to 2.89x on class C. The DSCRs utilize a Fitch-calculated net cash flow (NCF See National Cristina Foundation. ), based on servicer provided net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. adjusted for annual capital improvements and a hypothetical refinance constant of 10.04%. The Fitch NCF for the eleven properties that reported financials has increased by 48% since underwriting and 8% since YE 1999. Of concern to Fitch is an office property representing 7.4% of the pool located in Jacksonville, FL. This property is suffering from increased competition in the market and did not report YE 2000 financials. Using the Fitch NCF and a blended capitalization rate Capitalization Rate According to the Appraisal Institute, it is a method used to convert an estimate of a single year's income expectancy into an indication of value in one direct step, by dividing the income estimate by an appropriate rate. of 9.5%, the pool has a current overall loan to value (LTV LTV See: Loan-to-value ratio ) ratio of 33%. Fitch will continue to monitor this transaction, as surveillance is ongoing. |
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