NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed 18 classes of J.P. Morgan Chase Commercial Mortgage Securities Corp (JPMCC) commercial mortgage pass-through certificates series 2006-CIBC17. A detailed list of rating actions follows at the end of this release.
KEY RATING DRIVERS
The affirmations reflect the relatively stable performance of the pool since Fitch's last rating action. Fitch modeled losses of 8.9% of the remaining pool; expected losses on the original pool balance total 18.2%, including $313.7 million (12.4% of the original pool balance) in realized losses to date. Fifteen specially serviced loans have liquidated since the June 2015 review with losses extending to class AJ; currently three specially serviced loans (7.9% of the pool) remain. Fitch has designated 27 loans (26.6% of the pool) as Fitch Loans of Concern, which includes the remaining specially serviced assets.
As of the February 2016 distribution date, the pool's aggregate principal balance has been reduced by 34.8% to $1.65 billion from $2.54 billion at issuance. Per the servicer reporting, 10 loans (9.3% of the pool) are defeased. Interest shortfalls are currently affecting classes H through NR.
The largest contributor to expected losses (6.7% of the pool) is a 1,001,493 square foot (sf; 479,954 sf of collateral) regional mall located in Wilmington, NC and known as the Independence Mall. The loan transferred to special servicing in October 2014 due to monetary default. The non-owned anchors include Sears, Belk, and Dillard's. Since the last rating action the largest collateral tenant, JC Penney (23.4% net rentable area [NRA]), has extended their lease from the previous expiration in August 2016 to August 2021. The year-to-date (YTD) Sept. 30, 2015 debt service coverage ratio (DSCR) is 0.86x with occupancy at 93%. The overall mall was 94.5% occupied as of the November 2015 rent roll. Per the special servicer, the property has experienced a decline in the quality of tenants being attracted to the mall and the property has experienced challenges securing new leases; an adjacent power center has lured potential tenants from the mall. The special servicer is discussing a loan modification with the borrower.
The next largest contributor to expected losses (8.4% of the pool) is secured by two office properties totaling 623,482 sf located in the Orlando, FL CBD. Largest tenants are CNL Financial Group (22% NRA, expiration October 2021) and Red Lobster (15% NRA, expiration December 2027). The Red Lobster lease commenced in January 2015 and the space serves as their new restaurant-support center and headquarters. The two properties are approximately 99% occupied as of December 2015; however, per the December 2015 rent rolls, rollover in 2016 is roughly 18%. The loan matures in November 2016.
The Stable Outlooks on classes A-4, A-SB, and A-1A reflect current performance and credit enhancement. CE on all classes has declined since Fitch's last rating action due to liquidation of the Bank of America Plaza loan, previously a specially serviced loan and largest loan in the pool ($263 million loan balance), and losses from other specially serviced loans. In addition, a high concentration of Fitch Loans of Concern remains. Upgrades to classes A-4, A-SB, and A-1A are not likely as the pool becomes more concentrated, and interest shortfalls may be a concern if additional loans transfer to special servicing. The Negative Outlook on class A-M reflects expected losses and risk from the remaining specially serviced loans and the Fitch Loans of Concern.
DUE DILIGENCE USAGE
No third-party due diligence was provided or reviewed in relation to this rating action.
Fitch has affirmed the following ratings as indicated:
--$986.8 million class A-4 at 'Asf'; Outlook Stable;
--$2.2 million class A-SB at 'Asf'; Outlook Stable;
--$217.2 million class A-1A at 'Asf'; Outlook Stable;
--$253.7 million class A-M at 'Bsf''; Outlook Negative;
--$193.7 million class A-J at 'Dsf'; RE 30%;
--$0 class B at 'Dsf'; RE 0%;
--$0 class C at 'Dsf'; RE 0%;
--$0 class D at 'Dsf'; RE 0%;
--$0 class E at 'Dsf'; RE 0%;
--$0 class F at 'Dsf'; RE 0%;
--$0 class G at 'Dsf'; RE 0%;
--$0 class H at 'Dsf'; RE 0%;
--$0 class J at 'Dsf'; RE 0%;
--$0 class K at 'Csf'; 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%.
The class A-1 and A-3 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 is available at www.fitchratings.com.
Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)
Dodd-Frank Rating Information Disclosure Form