NEW YORK--(BUSINESS WIRE)--Fitch Ratings has upgraded three classes, downgraded two classes and revised the Rating Outlooks on three classes of J.P. Morgan Chase Commercial Mortgage Series Corp. commercial mortgage pass-through certificates series 2005-LDP5. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The upgrades are the result of increased credit enhancement from continued principal paydown and a significant increase in defeasance in the collateral pool since Fitch's last review. The downgrades on the distressed classes are due to Fitch's concern over final recoveries on the special serviced loans. Fitch modeled losses of 10.1% for the remaining pool; expected losses on the original pool balance total 6.7%, including $48.1 million (1.1% of the original pool balance) in realized losses to date. Fitch has designated 30 loans (20.9%) as Fitch Loans of Concern, which includes six specially serviced assets (5%).
As of the March 2015 distribution date, the pool's aggregate principal balance has been reduced by 44.7% to $2.39 billion from $4.33 billion at issuance. Currently, 27 loans (34.8%) are defeased, three of which (25.3%) are among top 10 of the remaining pool. Interest shortfalls totaling $19.2 million are currently affecting classes K through NR.
The Positive Rating Outlook on classes B and C indicates that future upgrades are possible if the transaction continues to pay down as expected. The Stable Rating Outlooks on other rated classes indicate that affirmations are likely. Future downgrades are unlikely unless there is a significant decline in pool performance. In addition, the distressed classes (rated below 'B') may be subject to further rating actions as losses are realized.
The largest contributor to expected losses is a 706,684 square foot (sf) regional enclosed mall located in Hanover, MA (3.3%). The property became a real estate owned (REO) asset in February 2010 through foreclosure. Anchor tenants include WalMart and Dick's Sporting Goods. Another anchor tenant, JC Penney, which leases approximately 9% of the net rentable area, will close its store in April 2015 but will continue to pay rent until its lease ends in March 2019. The servicer reported property occupancy was 91% as of January 2015.
The next largest contributor to expected losses is the Atlantic Development Portfolio loan (3.4%), which is secured by five office complexes and two industrial properties located in Somerset and Warren, NJ. The properties have suffered from reduced revenue due to lower occupancy, as a result of tenants vacating upon or prior to lease expirations. The servicer reported portfolio occupancy as of third quarter 2014 (3Q'14) was 73%, compared to 87.8% at year-end (YE) 2013 and 97% at issuance. The servicer reported 1Q'14 debt service coverage ratio (DSCR) was 1.03x, compared to 1.0x at YE2013, 0.8x at YE2012 and 0.81x at YE2011.
The third largest contributor to expected losses is the DRA-CRT Portfolio II (4.4%), which is secured by a portfolio of 27 building office portfolio located in Orlando, FL and Memphis, TN. The loan was modified into an A/B note structure effective June 2013, with the A note being interest only and the B note having its interest deferred. In addition, the maturity date was extended seven years until November 2019. The servicer reported 3Q'14 DSCR was 1.69x and the portfolio occupancy was at 68.9%.
Fitch upgrades the following classes as indicated:
--$299 million class A-J to 'AAAsf' from 'AAsf', Outlook Stable;
--$26.2 million class B to 'AAsf' from 'Asf', Outlook to Positive from Stable;
--$73.4 million class C to 'Asf' from 'BBBsf', Outlook to Positive from Stable.
Fitch downgrades the following classes as indicated:
--$26.2 million class L to 'Csf' from 'CCsf', RE 0%;
--$15.7 million class M to 'Csf' from 'CCsf', RE 0%.
Fitch affirms the following classes as indicated:
--$939.9 million class A-4 at 'AAAsf', Outlook Stable;
--$241.3 million class A-1A at 'AAAsf', Outlook Stable;
--$419.7 million class A-M at 'AAAsf', Outlook Stable;
--$42 million class D at 'BBB-sf', Outlook Stable;
--$21 million class E at 'BBsf', Outlook Stable;
--$52.5 million class F at 'Bsf', Outlook Stable;
--$36.7 million class G at 'B-sf', Outlook to Stable from Negative;
--$52.5 million class H at 'CCCsf', RE 50%;
--$42 million class J at 'CCCsf', RE 0%;
--$63 million class K at 'CCsf', RE 0%;
--$15.7 million class N at 'Csf', RE 0%;
--$5.2 million class O at 'Csf', RE 0%;
--$5.2 million class P at 'Csf', RE 0%;
--$10.5 million class Q at 'Csf', RE 0%.
The class A-1, A-2FL, A-2, A-3 and A-SB certificates have paid in full. Fitch does not rate the class NR, HG-1, HG-2, HG-3, HG-4 and HG-5 certificates. Fitch previously withdrew the ratings on the interest-only class X-1 and X-2 certificates.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (Aug. 4, 2014);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 10, 2014).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria