Fitch Ratings Downgrades Prudential 1995-MCF2 Classes G & H.
CHICAGO--(BUSINESS WIRE)--Feb. 28, 2003
Prudential Securities Secured Financing Corp.'s commercial mortgage pass-through certificates, series 1995-MCF2, $12.2 million class G is downgraded to 'CCC' from 'B+' and removed from Rating Watch Negative, and $11.1 million class H is downgraded to 'C' from 'CCC' by Fitch Ratings. In addition. Fitch affirms the remaining Fitch-rated classes: $5.9 million class A-2, interest-only class A-EC, $8.9 million class B, $13.3 million class C and $8.9 million class D at 'AAA', $15.6 million class E at 'A+' and $5.6 million class F at 'BBB+'. Fitch does not rate the $5.3 million class J-1 or the $5.3 million class J-2 certificates and class A-1 has been repaid in full. The rating downgrades and affirmations follow Fitch's review of the transaction after the master servicer, Midland Loan Services Inc. (Midland), elected to recover additional advances on three loans with non-recoverable advance determinations as of the Feb. 25, 2003 determination date.
Midland made non-recoverable advance determinations on three loans in the pool at various times in 2001 and 2002. In December 2002, Midland began the process of recovering a total of approximately $1.5 million of advances on these loans. Since Midland is attempting to maintain full principal and interest payments to investment grade rated classes, the recovery is spread out over time which will cause interest shortfalls to the non-investment grade rated classes. Interest shortfalls due to recoveries started in December 2002 were expected to affect classes G, H and J-2 for approximately one year. In February 2003, Midland elected to recover an additional $2.3 million of outstanding advances on these loans. At the same time, approximately $1.3 million of a $2.3 million scheduled loan payoff was used to reimburse a portion of these new recoveries. The remaining $1 million will be recovered over approximately one year, and $1.3 million was taken as a loss to class J-2. These recoveries combined with the December 2002 recoveries will cause at least two years of interest shortfalls to the non-investment grade rated classes, assuming there are no other trust expenses to cause more shortfalls. Due to the lack of interest payments to classes G and H for a significant amount of time and the unlikely possibility of recovery, Fitch deemed it necessary to downgrade the classes.
The three loans causing the shortfalls are secured by two healthcare properties and one multifamily property respectively. Together these loans, Mountain Creek Manor, Bristol House/Walden Oaks and Lost River Apartments comprise approximately 13.2% of the outstanding pool balance. Fitch also assumed an additional $6 million in losses attributed to these loans, which would cause a complete loss to class J-2 and partial loss to class H.
For more information, please see the Fitch press releases dated Dec. 18, 2002 ('Fitch Places Prudential 1995-MCF2 Class G on Rating Watch Negative') and July 9, 2002 ('Fitch Downgrades 2 Classes of Prudential Securities 1995-MCF2'), both available on the Fitch Ratings web site at 'www.fitchratings.com'.
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|Date:||Feb 28, 2003|
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