Fitch Affirms J.P. Morgan Chase Commercial Mortgage Securities Trust 2013-ALC

CHICAGO--()--Fitch Ratings has affirmed all classes of J.P. Morgan Chase Commercial Mortgage Securities Trust 2013-ALC commercial mortgage pass-through certificates, series 2013-ALC. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations reflect stable collateral performance since issuance. As of year-end (YE) 2013 servicer-reported occupancy declined to 73.8% compared to 78.4% at issuance. Net cash flow (NCF), however, increased approximately 7% compared to Fitch's issuance NCF due to higher revenues and stable expense ratios.

RATING SENSITIVITIES

The Rating Outlooks are expected to remain Stable. Upgrades will be limited due to the transaction's asset concentration, short relative life and potential operational volatility of assisted living facilities. Additional information on rating sensitivity is available in the report J.P. Morgan Chase Commercial Mortgage Securities Trust 2013-ALC', dated Jan. 16, 2014.

The certificates represent the beneficial interests in a two-year loan floating-rate mortgage loan secured by the fee (78) and leasehold interests (1) in 79 assisted living facilities (ALFs) and congregate care facilities owned collectively by the 79 special purpose property companies (the PropCo borrowers). The collateral also includes all furniture, fixtures, equipment and personal property used in the operation of each property as well as the PropCo borrowers' interest in the healthcare collateral including the health care licenses.

The portfolio is geographically diverse across secondary markets in 15 states. The largest state exposure is Indiana with 15 facilities representing 19% by number of properties and 16.9% by allocated loan balance. No single facility contributes more than 4% of net cash flow (NCF).

The sponsor of the transaction is an affiliate of TPG Capital, L.P. (TPG) and the loan was used to finance the assets in conjunction with TPG's acquisition of Assisted Living Concepts, LLC (ALC). Total acquisition costs were approximately $538.2 million with TPG contributing approximately $281.5 million of cash equity. After issuance, TPG replaced the existing management with a new CEO and COO with significant experience in the senior living industry, including leading the turnaround of another underperforming assisted living facility operator.

Fitch has affirmed the following classes:

--$152 million class A 'AAAsf'; Outlook Stable;

--$250 million interest-only class X-CP 'BBBsf'; Outlook Stable;

--$250 million interest-only class X-EXT 'BBBsf'; Outlook Stable;

--$53 million class B 'AA-sf'; Outlook Stable;

--$34 million class C 'A-sf'; Outlook Stable;

--$11 million class D 'BBBsf; Outlook Stable.

A comparison of the transaction's Representations, Warranties, and Enforcement (RW&E) mechanisms to those of typical RW&Es for the asset class is available in the following report: 'J.P. Morgan Chase Commercial Mortgage Securities Trust 2013-ALC - Appendix' dated Jan. 16, 2014.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (May 2014);

--'Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions' (September 2013).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821

Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=718468

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=841135

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Contacts

Fitch Ratings
Media Relations
Sandro Scenga, New York
Tel: +1 212-908-0278
Email: sandro.scenga@fitchratings.com
or
Primary Analyst
R. Brook Sutherland
Director
+312-606-2346
Fitch Ratings, Inc.
70 W. Madison St
Chicago, IL 60602
or
Committee Chairperson
Karen Trebach
Senior Director
+1-212-908-0215

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Contacts

Fitch Ratings
Media Relations
Sandro Scenga, New York
Tel: +1 212-908-0278
Email: sandro.scenga@fitchratings.com
or
Primary Analyst
R. Brook Sutherland
Director
+312-606-2346
Fitch Ratings, Inc.
70 W. Madison St
Chicago, IL 60602
or
Committee Chairperson
Karen Trebach
Senior Director
+1-212-908-0215