Fitch Ratings Upgrades ASC Series 1996-D3 Classes A-2, A-3 & A-4

Fitch Ratings Upgrades ASC Series 1996-D3 Classes A-2, A-3 & A-4

Business Editors


Fitch Ratings upgrades Asset Securitization Corp.’s (ASC) commercial mortgage pas-through certificates, series 1996-D3, as follows:

— $39.1 million class A-2 certificates to ‘AAA’ from ‘AA’;

— $35.2 million class A-3 certificates to ‘AA-‘ from ‘A’;

— $39.1 million class A-4 certificates to ‘A-‘ from ‘BBB’.

In addition, Fitch affirms the following classes:

— $302.2 million class A-1C ‘AAA’;

— $19.6 million class A-1D ‘AAA’;

— $43 million class B-1 ‘BB’;

— $27.4 million class B-2 ‘CCC’;

— $5.7 million class B-3 ‘D’.

Fitch does not rate class A-5. Classes A-1A and A-1B have paid off in full.

The upgrades are due to an increase in credit enhancement since issuance and levels which are in line with the subordination levels of deals issued today having similar characteristics. As of the March 2004 distribution date, the pool’s aggregate certificate balance has decreased by 32.7% since issuance, to $527 million from $782.6 million. Of the original 112 loans, 91 are currently outstanding in the pool.

Eight loans are currently in special servicing including one 60 days delinquent, one 90 days delinquent, three in foreclosure and three real estate-owned (REO) loans. Losses are expected on five of these loans. Six of the specially serviced loans, including two REO loans, are secured by hotel properties.

The largest specially serviced loan (2.9%), is secured by a 263-room, ten-story full-service hotel in downtown Atlanta. This loan is currently delinquent as a result of weak demand and declining economic conditions. The loan transferred to the special servicer recently and pre-negotiations have begun for a possible workout of the loan.

The second largest loan in special servicing (0.6%), is secured by a 75-bed nursing home in Westwood CA. This loan originally transferred to the special servicer due to a covenant default and the special servicer is working to modify the loan.

Fitch remains concerned with the pool’s high hotel (31%) concentration. Also of concern is the loan concentration, with the top five loans representing 34% of the pool.

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