NEW YORK--()--Fitch Ratings has downgraded seven classes and affirmed 12 classes of JP Morgan Commercial Mortgage Securities Corp pass-through certificates series 2006-LDP7. A detailed list of rating actions follows at the end of this press release.
Fitch modeled losses of 7.3% of the remaining pool; expected losses on the original pool balance total 9.3%, including losses already incurred. The pool has experienced $125.2 million (3.2% of the original pool balance) in realized losses to date. Fitch has designated 55 loans (23.6%) as Fitch Loans of Concern, which includes 22 specially serviced assets (14.4%).
As of the November 2012 distribution date, the pool's aggregate principal balance has been reduced by 15.4% to $3.33 billion from $3.94 billion at issuance. Per the servicer reporting, four loans (1.2% of the pool) have defeased since issuance. Interest shortfalls are currently affecting classes H through NR.
The largest contributor to expected losses is the Westfield Centro Portfolio loan (7.2% of the pool), which is secured by a portfolio of four regional malls and one anchored retail center totaling 2.4 million square feet (sf) (1.7 million sf of collateral) located in OH, CT, MO, CA, and CO. The decline in performance is mainly attributed to the Midway Mall property located in Elyria, OH, which continues to struggle with low occupancy in a weak market. The mall is currently 61.8% occupied. Three of the remaining properties have current occupancies above 95% and one is 73% occupied. The trailing twelve month (TTM) June 2012, debt-service coverage ratio (DSCR) for the portfolio remained stable at 1.09x.
The next largest contributor to expected losses is the specially-serviced 552,927 sf office property (1.6%) located in Shoreview, MN, approximately 12 miles north of the Minneapolis CBD. The collateral consists of five buildings built in 1973 and renovated in 2005. The loan was transferred to special servicing in October 2009 due to imminent default resulting from the largest tenant, (41%) net rentable area (NRA), vacating at lease expiration. Tenants include: Land O'Lakes, Inc. (22.2%), expiring August 2013, American Biosystems, Inc. (18.1%), expiring February 2013. The property is currently real estate owned (REO) as of March 2012. CB Richard Ellis has been retained as property manager and leasing agent. The property is currently 54% occupied. The special servicer is currently evaluating possible disposition alternatives.
The third largest contributor to expected losses is the specially-serviced, 197,097 sf retail center (0.9%) built in 1980 and renovated in 2003, located in Jupiter, FL. The loan was transferred to special servicing in August 2012 for imminent default. Leases at the property include: Cobb's Theatre (35.5%), expiration June 2013; Beall's, (18.3%), expiration April 2017 and Staples (10.9%) expiration Feb 2017. As of June 2012, the property is 92.93% occupied. The special servicer engaged legal counsel in September 2012. The special servicer continues negotiations with the borrower while dual tracking foreclosure action.
Fitch downgrades the following classes and assigns or revises Recovery Estimates (REs) as indicated:
--$310.3 million class A-J to 'BBBsf' from 'Asf'; Outlook Negative;
--$78.8 million class B to 'Bsf' from 'BBsf'; Outlook Negative;
--$44.3 million class C to 'CCCsf' from 'Bsf'; RE 100%;
--$14.8 million class D to 'CCCsf' from 'B-sf'; RE 15%;
--$39.4 million class E to 'CCsf' from 'CCCsf'; RE 0%;
--$39.4 million class F to 'Csf' from 'CCCsf'; RE 0%;
--$49.2 million class G to 'Csf' from 'CCsf'; RE 0%.
Fitch affirms the following classes but assigns or revises REs as indicated:
--$39.4 million class H at 'Csf'; RE 0%.
Fitch affirms the following classes as indicated:
--$66.5 million class A-3A at 'AAAsf'; Outlook Stable;
--$88.7 million class A-3FL at 'AAAsf'; Outlook Stable;
--$76.2 million class A-3B at 'AAAsf'; Outlook Stable;
--$1.6 billion class A-4 at 'AAAsf'; Outlook Stable;
--$105 million class A-SB at 'AAAsf'; Outlook Stable;
--$323.2 million class A-1A at 'AAAsf'; Outlook Stable;
--$394 million class A-M at 'AAAsf'; Outlook Stable;
--$44.3 million class J at 'Csf'; RE 0%;
--$2.8 million class K at 'Dsf'; RE 0%;
--$0 class L at 'Dsf'; RE 0%;
--$0 class M at 'Dsf'; RE 0%.
Classes A-1 and A-2 are paid in full. Fitch does not rate the class N, P, Q and NR certificates. Fitch previously withdrew the rating on the interest-only class X certificates.
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' (June 6, 2012);
--'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions' (Dec. 21, 2011).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions