NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed 12 classes of J.P. Morgan Chase Commercial Mortgage Securities Trust 2012-C8 commercial mortgage pass-through certificates series 2012-C8 (JPMCC 2012-C8). A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The affirmations are the result of stable performance of the underlying pool since issuance. As of the June 2016 distribution date, the pool's aggregate principal balance has been reduced by 8.3% to $1 billion from $1.1 billion at issuance. The pool has experienced no realized losses to date. Fitch has designated three (8.3%) Fitch Loans of Concern (FLOC), including one specially serviced loan, due to declining performance as a result of significant tenant rollover. No loans are defeased. Interest shortfalls are currently affecting the non-rated class. There were variances to criteria related to classes B, C, and D whereby the surveillance criteria indicated rating upgrades were possible. However, Fitch determined that upgrades were not warranted as there has been no material change to the pool since issuance and no significant increase in credit enhancement.
The largest loan (11.8% of the pool) is secured by a 1 million square foot (sf) interest in a 1.2 million sf regional mall located in Springfield, MO. Collateral anchors are JC Penney, Dillard's, Dillard's Men's & Home, and Macy's, with non-collateral anchor Sears. As of year-end (YE) 2015, the servicer-reported collateral occupancy and debt service coverage ratio (DSCR) was 97.3% and 3.43x, respectively. Approximately 18.5% of NRA, including Macy's, is scheduled to expire in 2017. Fitch will continue to monitor for leasing status updates especially with regard to the Macy's lease, as sales continue to be below issuance levels and below Macy's average. The loan is sponsored by Simon Property Group, L.P.
The second largest loan (7.9% of the pool) is secured by a 280,299 sf office building located in Seattle, WA. Per the April 2016 rent roll, the property is 95% leased, primarily to General Services Administration (GSA) tenants including the following: Department of Labor (31.7%; lease expires 2020), Drug Enforcement Agency (26.5%; lease expires 2022) and Social Security (11.4%; lease expires 2020). DSCR was a reported 1.34x as of YE 2015. The loan is sponsored by Martin Selig.
The specially serviced loan (1.4% of the pool) is secured by a 199,783 sf office building located in downtown Norfolk, VA. The loan transferred to specially servicing in January 2016 due to imminent default. Twelve tenants vacated the property during 2015, eight of which left prior to their lease expirations including a design firm that represented 11.3% of NRA. The largest tenant to vacate (16.7% of NRA) left after its Dec. 31, 2014 lease holdover period expired. As a result, occupancy declined from 93% at YE 2014 to 66% as of the trailing 12 month period ended March 31, 2016. The loan is 30 days delinquent and cash managed under a hard lock box.
The largest FLOC (5.5% of the pool) is fifth largest loan and secured by three Class B office buildings (569,986 sf) located in Houston, TX within the energy corridor. At least 60% of the tenant base is energy related, and approximately 41.4% in rollover is scheduled through 2017. The loan is amortizing on a 30-year schedule with a current loan per square foot of $100.8.
The other loan of concern (1.4% of the pool) is secured by a 146,538 sf office property located in Orlando, FL. Occupancy declined from 86.5% at YE 2013 to 59% at YE 2014, due to one tenant vacating upon its March 2014 lease expiration. Occupancy remains low at 63% as of YE 2015, and the servicer-reported DSCR is 0.99x.
Rating Outlooks on classes A-2 through G are Stable due to overall stable pool performance. Future upgrades to senior classes are possible should loans pay off at their scheduled maturities; 2017 maturities represent 14.6% of the pool. Fitch does not foresee negative ratings migration unless a material economic and/or asset level event changes the transaction's portfolio-level metrics.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating.
Fitch has affirmed the following classes:
--$171.8 million class A-2 at 'AAAsf'; Outlook Stable;
--$426.1 million class A-3 at 'AAAsf'; Outlook Stable;
--$103.6 million class A-SB at 'AAAsf'; Outlook Stable;
--$803.9 million class X-A* at 'AAAsf'; Outlook Stable;
--$102.3 million class A-S** at 'AAAsf'; Outlook Stable;
--$56.8 million class B** at 'AAsf'; Outlook Stable;
--$44 million class C** at 'Asf'; Outlook Stable;
--$203.1 million class EC** at 'Asf'; Outlook Stable.
--$35.5 million class D at 'BBB+sf'; Outlook Stable;
--$32.7 million class E at 'BBB-sf'; Outlook Stable;
--$15.6 million class F at 'BBsf'; Outlook Stable;
--$17 million class G at 'Bsf'; Outlook Stable.
*Notional amount and interest only.
**Class A-S, class B and class C certificates may be exchanged for class EC certificates, and class EC certificates may be exchanged for Class A-S, class B and class C certificates.
Class A-1 was repaid in full. Fitch does not rate the $36,938,989 class NR certificates or the $238,681,989 interest only class X-B.
Additional information is available at www.fitchratings.com.
Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)
Global Structured Finance Rating Criteria (pub. 27 Jun 2016)
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