NEW YORK--(BUSINESS WIRE)--Fitch Ratings has downgraded two classes, upgraded one class, and affirmed 19 classes of J.P. Morgan Chase Commercial Mortgage Securities Trust commercial mortgage pass-through certificates series 2007-LDP12. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The upgrade is a result of increased credit enhancement from paydown and higher than expected recoveries on two of the larger assets liquidated since Fitch's last rating action, lowering Fitch's overall loss expectations. The downgrades to the distressed classes are due to a greater certainty of loss expectations associated with loans currently in special servicing.
Fitch modeled losses of 10.2% of the remaining pool; expected losses on the original pool balance total 12.8%, including $134.5 million (5.4% of the original pool balance) in realized losses to date. Fitch has designated 35 loans (25.5%) as Fitch Loans of Concern, which includes nine specially serviced assets (6.9%).
As of the November 2013 distribution date, the pool's aggregate principal balance has been reduced by 27.2% to $1.82 billion from $2.5 billion at issuance. Per the servicer reporting, one loan (0.2% of the pool) is defeased. Interest shortfalls are currently affecting classes F through NR.
The largest contributor to expected losses is the REO asset, Liberty Plaza (2.4% of the pool), a 371,109 square foot (sf) community shopping plaza located in Philadelphia, PA, anchored by a 24 hour Wal-Mart, Dick's Sporting Goods, and PathMark. The loan was transferred to special servicing in January 2013 due to imminent default and became REO through a deed in lieu. Per the special servicer, the largest tenant, Wal-Mart has exercised an option to extend its lease through March 2014. Wal-Mart plans to vacate at lease expiration as they will be relocating to an adjacent location at the Franklin Mills Mall. Wal-Mart comprises 131,812 SF (36% of NRA and 34% of net rental income. The property is 98% occupied as of July 2013. Per the special servicer, the leasing team continues to search for replacements for Wal-Mart. The servicer is also addressing deferred maintenance items.
The next largest contributor to expected losses is the St. Joe 150 W. Main loan (2.5%), which is secured by a 227, 047 sf multi-tenanted office building located in Norfolk, VA. The largest three tenants are Kaufman & Canoles (28%), SunTrust Bank (21%), CB Richard Ellis (7%) with lease expirations in 2022, 2018, and 2015; respectively. Occupancy at the property has declined to 78% from 84% at last review with average rent of $23.30 per square foot (psf). There is minimal rollover until 2015 when 11% of the space rolls. Per REIS as of 3Q 2013, the Norfolk submarket vacancy is 20.5% with average asking rent of $21.69 psf. The most recently reported debt-service coverage ratio as of September 2013 is 0.84x with occupancy at 78.5%.
The third largest contributor to expected losses is the BB&T Tower loan (1.7%), which is secured by an 18 story high rise office building with 252,507 sf built in 1975, renovated in 1994, located in Jacksonville, FL. The largest tenants are Branch Banking (19%), HDR Engineering (9%), Patriot Transport (6%), with lease expirations in 2019, 2018, and 2023; respectively. As of September 2013, the property is 84.2% occupied with average rent of $19.80 psf. Per REIS as of 3Q 2013, the Jacksonville metro vacancy rate is 20.8% with asking rent of $18.52. The loan structure includes a leasing holdback and capital expenditure holdback for the purpose of upgrading the property's equipment and common areas. Wells Fargo has reviewed and approved a second amendment to the office lease for Office of Chapter 13 trustee, an instrument of the US Government. The loan matures in July 2014. There is 4% upcoming rollover in 2015 and 12% in 2016. The Replacement Reserve has a current balance of $250,241; Tenant Reserve $1,608,632; and Debt Service Reserve $31.23.
Rating Outlooks on classes A-2 through A-M are Stable due to increasing credit enhancement and continued paydown.
Fitch downgrades the following classes as indicated:
--$21.9 million class D to 'CCsf' from 'CCCsf', RE 0%;
--$12.5 million class E to 'Csf' from 'CCsf', RE 0%.
Fitch upgrades the following class:
--$250.5 million class A-M to 'BBBsf' from 'BBB-sf', Outlook to Stable from Negative.
Fitch affirms the following classes as indicated:
--$12 million class A-2 at 'AAAsf', Outlook Stable;
--$346.2 million class A-3 at 'AAAsf', Outlook Stable;
--$601.7 million class A-4 at 'AAAsf', Outlook Stable;
--$36 million class A-SB at 'AAAsf', Outlook Stable;
--$211.8 million class A-1A at 'AAAsf', Outlook Stable;
--$197.2 million class A-J at 'CCCsf', RE 90%
--$21.9 million class B at 'CCCsf', RE 0%;
--$28.2 million class C at 'CCCsf', RE 0%;
--$25 million class F at 'Csf', RE 0%;
--$28.2 million class G at 'Csf', RE 0%;
--$28.2 million class H at 'Csf', RE 0%;
--$3.1 million class J at 'Dsf', RE 0%;
--$0 class K at 'Dsf', RE 0%;
--$0 class L at 'Dsf', RE 0%;
--$0 class M at 'Dsf', RE 0%;
--$0 class N at 'Dsf', RE 0%;
--$0 class P at 'Dsf', RE 0%;
--$0 class Q at 'Dsf', RE 0%;
--$0 class T at 'Dsf', RE 0%.
The class A-1 certificates have paid in full. Fitch does not rate the class 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. 11, 2013 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at 'www.fitchratings.com' under the following headers:
Structured Finance >> CMBS >> Criteria Reports
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 24, 2013);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 11, 2013).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria