Fitch Ratings has affirmed all six classes of Lone Star Funds (LSTAR)
2011-1 commercial mortgage pass-through certificates. A detailed list of
rating actions follows at the end of this release.
The affirmations reflect the expected performance of the underlying
collateral pool. The attributes of this transaction, which closed in
June 2011, are materially different from other recent Fitch-rated
conduit transactions. The loans have substantial seasoning and are
scheduled to amortize more rapidly than newly originated loans. The
collateral at issuance featured high initial loan to values (LTV's) and
low debt service coverage ratios (DSCR). In addition, some loans in the
transaction had a history of delinquency at issuance.
As of the May 2012 distribution date, the pool's aggregate principal
balance paid down 16.76% to $299.2 million from $359.5 million at
issuance. Sixteen loans have paid in full since issuance, with 133 of
the original 149 loans remaining in the transaction. Multifamily
represents 58.7% of the current pool balance. The properties serving as
collateral for the loans are also largely concentrated in California
(49.1%). No loans are defeased. Interest shortfalls are affecting the
unrated class G.
Fitch modeled losses of 12.12% of the remaining pool. Fitch has
designated 39 loans (28.44% of the pool balance) as Fitch Loans of
Concern, which include 12 specially serviced loans (7.91%). The payment
status for six of the specially serviced loans (3.46%) are 'Current',
with the remaining six loans (4.45%) payment status at '90+ days'
delinquent as of the May 2012 remittance date.
The largest contributor to Fitch-modeled losses is the 5400 Heritage
Tree Lane loan (5.31%), the largest loan in the pool. The loan is
secured by a 206 unit multifamily property in Citrus Heights, CA. Common
area amenities include two swimming pools with jacuzzis, a small
business center, and a gym. Each unit has granite countertops, a private
patio, as well as a washing machine and dryer. The year end (YE) 2011
DSCR reported at 1.16 times (x). The occupancy as of April 2012 reported
at 92.2% versus 92.7% at issuance. Loan payments have remained current
since issuance.
The second largest contributor to Fitch-modeled losses is secured by an
87,856 square foot (sf) mixed use property in Fallston, MD (1.38%). The
property is improved by a retail shopping center and two single-family
houses on three contiguous parcels. Retail tenants include Harvest Fare
Super Market and CVS Pharmacy. The loan had transferred to special
servicing in September 2011 for payment default. The servicer has
initiated foreclosure proceedings, and a receiver was appointed in
January 2012. A foreclosure sale was originally scheduled for late March
2012; however, the foreclosure has been postponed pending phase II
environmental testing.
Fitch has affirmed the following classes:
-- $158.12 million class A at 'AAAsf'; Outlook Stable;
-- $17.97 million class B at 'AAAsf'; Outlook Stable;
-- $28.31 million class C at 'Asf'; Outlook Stable;
-- $27.41 million class D at 'BBB-sf'; Outlook Stable;
-- $7.64 million class E at 'BBsf'; Outlook Stable;
-- $6.74 million class F at 'Bsf'; Outlook Stable.
Fitch does not rate the $53.02 million class G, the residual class R or
the interest only class X.
Additional information on Fitch's criteria for analyzing U.S. CMBS
transactions is available in the Dec. 21, 2011 report, 'Surveillance
Methodology for U.S. Fixed-Rate CMBS Transactions', which is available
at 'www.fitchratings.com'
under the following headers:
Structured Finance >> CMBS >> Criteria Reports
Additional information is available at 'www.fitchratings.com'.
The ratings above were solicited by, or on behalf of, the issuer, and
therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
-- 'Global Structured Finance Rating Criteria' (Aug. 4, 2011);
-- 'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions'
(Dec. 21, 2011).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923
Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=662869
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DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
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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
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