Fitch Upgrades JPMCC 2005-LDP2

NEW YORK--()--Fitch Ratings has upgraded four classes and affirmed 12 classes of J.P. Morgan Chase Commercial Mortgage Securities Corp.'s commercial mortgage pass-through certificates series 2005-LDP2 (JPMCC 2005-LDP2). A detailed list of rating actions follows at the end of this press release

KEY RATING DRIVERS

The upgrades to classes A-J through D are the result of increasing credit enhancement from loan disposals and continuing amortization as well as support from defeased collateral (0.5%). The affirmations reflect the pool's high concentration of specially serviced assets (52.0%) and continued paydown (6.2% of the pool is fully amortizing). Since Fitch's last rating action, class A-J balance has been reduced by 94%. Fitch has applied additional stresses in its base case analysis to factor in the increased concentration of underperforming loans and the credit quality of the remaining collateral. Fitch modeled losses of 40.2% of the remaining pool; expected losses on the original pool balance total 7.8%, including $154.5 million (5.2% of the original pool balance) in realized losses to date. Fitch has designated 14 (59.9%) Fitch Loans of Concern including the 11 specially serviced assets.

As of the May 2016 distribution date, the pool's aggregate principal balance has been reduced by 92.2% to $231.5 million from $2.98 billion at issuance. Per the servicer reporting, one loan (0.5% of the pool) is defeased. Interest shortfalls are currently affecting classes H through NR.

The largest contributor to expected losses is a Real Estate Owned (REO) 236,961 sf office plaza (10.5% of the pool) located in Piscataway, NJ. The asset became REO in May 2014. As of year-end (YE) 2015, the servicer-reported occupancy and debt service coverage ratio (DSCR) were 70% and 0.80x, respectively. All tenant leases expire between 2020 and 2021.

The next largest contributor to expected losses (10.5% of the pool) is secured by two office properties (187,799 sf) located in Reston, VA. The loan previously transferred to the special servicer in January 2013 due to imminent default as each property lost its sole tenant in 2010 and 2012. The loan was modified in December 2014 and was returned to the master servicer in February 2015. The loan modification extended the maturity date to December 2017 from April 2015 and bifurcated the loan into a $24.2 million A and $4.8 million B note. The properties remain vacant.

The third largest contributor to expected losses is a specially serviced asset secured by a 204,674 sf office property (13.5% of the pool) located in Atlanta, GA. The loan transferred to special servicing in March 2011 for imminent default. The property became REO in July 2013. The property is scheduled for auction next month.

RATING SENSITIVITIES

The upgrades reflect the de-levering of the transaction. The Stable Rating Outlook on classes A-J through E reflects the increasing credit enhancement and expected continued pay down to the classes. Despite high credit enhancement to classes C and D, upgrades were limited due to the increased concentration of underperforming loans, interest shortfall risk, and the credit quality of the remaining collateral. Future upgrades are possible, should recoveries on specially serviced asset dispositions exceed expectations. Downgrades are likely to the distressed classes should additional losses be realized.

DUE DILIGENCE USAGE

No third-party due diligence was provided or reviewed in relation to this rating action.

Fitch has upgraded the following ratings and revised Rating Outlooks as indicated:

--$6.1 million class A-J to 'AAAsf' from 'Asf'; Outlook Stable;

--$18.6 million class B to 'AAAsf' from 'Asf'; Outlook Stable;

--$41 million class C to 'Asf' from 'BBB-sf'; Outlook Stable;

--$26.1 million class D to 'BBBsf' from 'BBsf'; Outlook to Stable from Negative.

Fitch has affirmed the following ratings and revised Rating Outlooks as indicated:

--$26.1 million class E at 'Bsf'; Outlook to Stable from Negative;

--$29.8 million class F at 'CCsf'; RE 0%;

--$26.1 million class G at 'CCsf'; RE 0%;

--$44.7 million class H at 'Csf'; RE 0%;

--$13.1 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 O at 'Dsf'; RE 0%;

--$0 class P at 'Dsf'; RE 0%;

--$0 class Q at 'Dsf'; RE 0%.

Fitch does not rate the class NR 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

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 28 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748781

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1005556

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1005556

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Contacts

Fitch Ratings, Inc.
Primary Analyst
Tiffany Pierce
Associate Director
+1-212-908-9107
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings, Inc.
Primary Analyst
Tiffany Pierce
Associate Director
+1-212-908-9107
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com