Hurricane Won't Impact CMBS Ratings

Despite an initial increase in delinquencies, Fitch Ratings, New, York said any negative long-term effects from Hurricane Charley are unlikely for its commercial mortgage-backed securities universe.However, Fitch said it will closely monitor ten CMBS transactions with a 20% or greater exposure to Florida, the state most affected by the hurricane and the fourth largest contributor of U.S. CMBS collateral. These transactions include CDC 2002-FX1, CSFB 1995-M1, CSFB 2004-TFL1, GMAC 2000-FLF, JP Morgan 2000-FL1, LTC Commercial Mortgage 1996-1, Morgan Stanley 1995-GAL1, Morgan Stanley Dean Witter 2002-XLF, Nationslink Funding 1998-1 and SASCO 1996-CFL1. "While there will likely be an uptick in CMBS delinquencies as borrowers are coming out of pocket to pay the deductibles and access to properties is limited, this should generally be a short-term phenomena," said Mary MacNeill, senior director, Fitch Ratings. Borrowers of commercial properties are required to carry insurance, including wind damage, which generally carries a 5% loss deductible, as well as property interruption insurance. Fitch said it has contacted the major servicers to determine the impact on their current portfolio. The extent of the damage is still being assessed at this time due to the continuing power outages and phone connectivity issues, the company said.