S&P Lwrs BofA Lg Ln 2002-FLT1,BofA Str Nt 2002-1 Rtgs.Business Editors NEW YORK--(BUSINESS WIRE)--April 23, 2003 Standard & Poor's Rating Services today lowered its ratings on class H and J from Banc of America Large Loan Inc.'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 2002-FLT1 (BALL 2002-FLT1). At the same time, ratings are affirmed on 11 other classes from the same transaction. Concurrently, the ratings on class A and B from a related transaction, Banc of America Structured Notes Inc.'s commercial mortgage pass-through certificates series 2002-1 (BASN BASN Bay Area Services Network 2002-1), are lowered. The property in the BASN 2002-1 trust consists of the class H and J certificates of the BALL 2002-FLT1 transaction. The ratings on the class A and B certificates of the BASN 2002-1 transaction mirror the ratings on the class H and class J certificates of the BALL 2002-FLT1 transaction (see list). The lowered ratings reflect concerns regarding the largest of the seven loans in this mortgage pool, representing 21.6% of the outstanding mortgage pool balance. The largest loan in the pool is a $178 million senior interest in a $207.5 million loan secured by the Starrett-Lehigh building located at 601 West 26th Street in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. . This 2.3-million-square-foot (sq. ft.) property was originally constructed in 1931 as an industrial loft building in the Chelsea section of Manhattan. The property was acquired by the present owner in 1998 and converted since that time into a loft office building. Based on results for the year ended Dec. 31, 2002, net cash flow (NCF See National Cristina Foundation. ) on a stabilized basis for this property has declined by 8% since issuance in February 2002. Occupancy has also declined to 76% for the year ended Dec. 31, 2002 from 88% at issuance. Another loan of concern is the smallest loan in the mortgage pool at 4.9% of the mortgage pool balance, and consists of a $40.0 million whole loan secured by the Windsor Court Hotel located in downtown New Orleans In New Orleans, Louisiana, "downtown" refers to areas along the Mississippi River down-river (roughly east) from Canal Street, including the French Quarter, Treme, Faubourg Marigny, the Bywater, the 9th Ward, and other neighborhoods. , La. This 324-room luxury hotel has seen NCF decline by 34% since issuance. Additionally, occupancy was 68.0%, average room rate was $256.91, and revenue per available room (RevPAR) was $174.70 for the year ended Dec. 31, 2002 compared to 73.1%, $255.54, and $186.80, respectively, at issuance. Standard & Poor's recently visited the property and found the property to be in very good physical condition, but located in a soft hotel market with more competing product in close proximity currently under construction. Smith Travel Research reports that RevPAR was down 12.6% for the first three months of 2003, compared to the same period last year for the New Orleans New Orleans (ôr`lēənz –lənz, ôrlēnz`), city (2006 pop. 187,525), coextensive with Orleans parish, SE La., between the Mississippi River and Lake Pontchartrain, 107 mi (172 km) by water from the river mouth; founded lodging market. Actual EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become for the Windsor Court Hotel itself fell 20% below budget during the first three months of 2003. As a result of the 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. for this property falling below $7,563,425 for the 12-month period ending Dec. 31, 2002, a "cash trap event" has occurred. The servicer, Bank of America
Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world. N.A., has trapped $4.5 million to date. The subject loan matures May 1, 2003, and the borrower has not filed for an extension as allowed under the loan terms. The borrower has represented that it has a loan commitment and expects to pay off this loan in May. If the loan is unable to refinance by June, further rating actions may be warranted. This transaction consists of four whole commercial loans and the senior interest in three participated commercial loans. In addition to the two loans described above, the mortgage pool contains: a $155 million whole loan secured by the in-line space and a portion of the anchor space 1. (Billiards) In the balk-line game, any of eight spaces, 7 inches by 3½, lying along a cushion and bisected transversely by a balk line. Object balls in an anchor space are treated as in balk. in the North Star Mall North Star Mall is a premier shopping mall in San Antonio, Texas with anchor tenants Dillard's, J.C. Penney, Macy's, Mervyns, and Saks Fifth Avenue as well as over 200 specialty stores, some exclusive to the San Antonio market, including Abercrombie Kids, Arden B, Armani Exchange, , a 1.28-million-sq.-ft. mall located in San Antonio, Texas “San Antonio” redirects here. For other uses, see San Antonio (disambiguation). San Antonio is the second most populous city in Texas, the third most populous metropolitan area in Texas, and is the seventh most populous city in the United States. As of the 2006 U.S. ; a $145 million whole loan secured by the in-line space and one of the anchors in FlatIron Crossing, a 1.5-million-sq.-ft. super regional mall in Broomfield, Colo.; a $129.4 million whole loan secured by the International Home Furnishing Center, a 2.7-million-sq.-ft. showroom and trade show property in High Point, N.C.; the $105 million senior interest in a $155.0 million loan secured by the Chelsea Market Chelsea Market is an enclosed, urban food court and shopping mall built within the former Nabisco factory complex where the Oreo cookie was invented and produced. The 22-building complex fills two entire blocks bounded by 9th and 11th Avenues and 15th to 16th Street. , a 1.1 million-sq.-ft. office loft building in New York City; and the $70.0 million senior interest in a $100.0 million loan secured by Central Research, a 468,323-sq.-ft. office and research development property in Sunnyvale, Calif. As of April 2003, the outstanding loan balance in the trust was $822.2 million, down from $826.2 million at issuance. Counter-balanced by the improved operating performance of the other five properties, the overall operating performance of the mortgage pool has been stable. Using results for the year ended Dec. 31, 2002, Standard & Poor's adjusted the net operating income provided by the servicer to arrive at a NCF for the mortgage pool (as a whole) of $137.1 million for the year ending Dec. 31, 2002, or 3.2% greater than at issuance in February 2002. Applying loan refinance constants ranging from 9.25% to 10.50%, Standard & Poor's arrived at an adjusted 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 ) on an NCF basis of 1.75x for the year ended Dec. 31, 2002, compared to 1.59x at issuance. Nonetheless, because of the floating-rate nature of these loans and the prevailing low interest rate environment, the actual weighted average DSCR on a NCF basis for the mortgage pool increased to 4.25x for the year ended Dec. 31, 2002 from 3.87x at issuance.
RATINGS LOWERED
Banc of America Large Loan Inc.
Commercial mortgage pass-thru certs series 2002-FLT1
Rating
Class To From
H BBB BBB+
J BB+ BBB
Banc of America Structured Notes Inc.
Commercial mortgage pass-thru certs series 2002-1
Rating
Class To From
A BBB BBB+
B BB+ BBB
RATINGS AFFIRMED
Banc of America Large Loan Inc.
Commercial mortgage pass-thru certs series 2002-FLT1
Class Rating
A-1 AAA
A-2 AAA
B AA+
C AA
D AA-
E A+
F A
G A-
X-1A AAA
X-1B AAA
X-2 AAA
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