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| Fitch Places COMM 2002-FL6 Classes K-JP & M-JP on Rating Watch Negative
Fitch Places COMM 2002-FL6 Classes K-JP & M-JP on Rating Watch Negative; Affirms Class G NEW YORK--(BUSINESS WIRE)--Aug. 12, 2003--Based on corrected and revised operating statement analysis reports provided by the master servicer, ORIX Capital Markets (ORIXCM) for COMM 2002-FL6, Fitch is no longer concerned with the performance of 530 5th Avenue. As a result, Fitch affirms class G and removes it from Rating Watch Negative. Fitch also places the $600,000 class K-JP certificates, currently rated 'BBB', and class $1 million M-JP certificates, currently rated 'BBB-', on Rating Watch Negative. In addition, the following classes remain on Rating Watch Negative: BizVantage – Personalized business, investment or technology Intelligence: the ultimate advantage. -- $800,000 class K-4M 'BBB+'; -- $1.5 million class L-4M 'BBB'; -- $3 million class M-4M 'BBB-'. Fitch also affirms the following classes: -- $47.9 million class A-1 'AAA'; -- $350 million class A-2 'AAA'; -- $20.5 million class B 'AAA'; -- $40.5 million class C 'AA'; -- Interest only classes X-1 and X-2 'AAA'; -- $38.7 million class D 'AA-'; -- $15.3 million class E 'A+'; -- $15.4 million class F 'A'; -- $15.2 million class G 'A-'; -- $3.4 million class K-WP 'BBB+'; -- $800,000 class L-FM 'BBB+'; -- $4 million class L-WP 'BBB'; -- $2.3 million class L-DC 'BBB'; -- $1.5 million class L-LP 'BBB'; -- $9.4 million class M-WP 'BBB-'; -- $3.9 million class M-DC 'BBB-'; -- $1.9 million class M-FM 'BBB-'; -- $1.7 million class M-LP 'BBB-'. The ratings for K-CC, L-CC, and M-CC have been withdrawn due to the repayment of the Capitol at Chelsea loan. Fitch does not rate classes H-WM, K-FA, L-FA, and M-FA. The classes placed on Rating Watch Negative represent the B-note portion of the JP Morgan Industrial Portfolio loan (2.3%). The occupancy of the collateral has declined to 83.7% as of July 7, 2003 from 93.6% at issuance, due to the increased vacancy in the Bollingbrook, IL property (Bollingbrook). Sony Corporation of America, a tenant in Bollingbrook, currently occupies 50,000 square feet (sf) on a short-term lease expiring August 2003, and has asked for a six month extension. The asking rate for the vacant space in the Bollingbrook (100,000 sf) is $3.45 psf, which is below the average current rate in the building. Due to recent additions to supply, this industrial market is considered soft. The ratings will remain on Rating Watch Negative as Fitch monitors the re-leasing progress and its effect on net cash flow (NCF). In addition to JP Morgan Industrial, Fitch has concerns with two other loans: 400 Madison Avenue and New Roc City. 400 Madison (7.7%) is collateralized by a 190,000 sf office building in the Grand Central submarket of New York City. The classes which relate to the B-note portion of the loan remain on Rating Watch Negative as Fitch monitors the tenancy and the increase in building operating expenses compared to issuance. The occupancy as of April 30, 2003 fell to 87.9% from 96.6% at issuance. In addition, Fitch is concerned about the 11.1% of leases that expire through the end of 2004 into a softened office real estate market. This concern is somewhat mitigated by the strong location near Grand Central Station. Based on the servicer's normalized year end 2002 statement adjusted for capital costs and non recurring expenses, the NCF declined by 8% since issuance, resulting in a 1.43 times (x) debt service coverage ratio (DSCR) for the A- and B-note combined amount, compared to 1.56x at issuance. New Roc City (8.4%) is collateralized by an entertainment and retail center located in New Rochelle, New York. The center is 97% leased as of Aug. 11, 2003, including a new lease for 2.2% of the net rentable area commencing in September 2003. The Fitch NCF for the year ended December 2002 declined by approximately 12.9% compared to issuance due to an increase in expenses and a decline in recoveries. The remaining loans in the pool have performed adequately compared to issuance. The Westfield Portfolio (27.7%), the largest loan in the pool, is collateralized by two regional malls located in Clearwater, FL and N. Olmstead, OH. Fitch is concerned with the drop in in-line occupancy at both malls which dropped to 87.1% overall as of March 31, 2003, compared to 91.3% at issuance. Based on eight months ended Dec. 31, 2002, NCF is essentially flat yielding a Fitch DSCR of 1.33x, compared to 1.36x at issuance. The pool has a total retail concentration of 41.9% and includes the Foothills Mall (5.9%) which has had a slight decline in occupancy to 96.2% as of March 31, 2003 from 97.1% at issuance. The pool has an office building concentration of 55.8%. The four additional office building loans are 500 West Monroe (19.8%), 530 5th Avenue (12.5%), Dublin Corporate Center (10.5%), and L'Enfant Plaza (5.3%). Each reports YE Dec. 31, 2002 NCF, which is relatively flat from issuance. Dublin Corporate Center's occupancy as of March 31, 2003 has improved to 98% from 91.5% at issuance. 500 West Monroe's occupancy as of May 1, 2003 has dipped to 94.5% compared to 100% at issuance. Both 530 5th Avenue and L'Enfant Plaza remain at 100% occupancy as of April 1, 2003. In general, each first mortgage loan is split into an A, B and C note. Each A note and B note has been contributed to form the Trust Mortgage Asset (TMA). While the A notes are pooled, the B and C notes provide credit enhancement only to the loan to which it relates. As part of its review, Fitch analyzed the performance of each loan and the underlying collateral and compared each loan's DSCR at closing to the most recent trailing twelve month (TTM) available. DSCRs are based on a Fitch stressed NCF and a stressed debt service on the TMA loan balance. Fitch also considered in its analysis the additional stress of the C note on the six loans (57.5%) that have C notes. The weighted average all-in DSCR for those loans with C notes is 1.10x, compared to 1.13x at issuance. Fitch will continue to monitor the loans of concern as surveillance is ongoing.
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