NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed 14 classes of J.P. Morgan Chase Commercial Mortgage Securities Trust commercial mortgage pass-through certificates series 2014-C22 (JPMBB 2014-C22). A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The affirmations of JPMBB 2014-C22 are based on the stable performance of the underlying collateral. There has been no material change to the transaction's performance since issuance. As of the July 2016 distribution date, the pool's aggregate principal balance has been reduced by 1.3% since issuance and remained relatively flat at $1.1 billion. The pool has experienced no realized losses to date. No loans have been in special servicing since issuance, and none are defeased.
Fitch has designated three (3.4%) Fitch Loans of Concern (FLOC), primarily due to upcoming tenant rollover risk. Each of the three loans are on the master servicer's watchlist; an additional six loans, 6.1 %, are also on the master servicer's watchlist for damages noted in the most recent inspections or failure to meet a performance threshold set by the servicer. However, these loans are performing in line with Fitch's expectations. 12.9% of the pool is full-term interest-only, and 59% of the pool is partial term interest-only.
The largest loan (8.1% of the pool) is secured by a two-building office complex consisting of 1,032,402 square feet (sf) located in Long Island City, NY. As of year-end (YE) 2015 the properties were 100% occupied, primarily by various New York agencies (rated 'AA' by Fitch). There is minimal rollover over the next two years (less than 0.5% total) and no rollover until 2019 when 11% of the NRA expires. The largest concentration of lease rollover is in 2020 with 32.4%. The loan is interest-only until 2019 and matures in July 2024.
The second largest loan (6.9%) is secured by a 421,719-sf, 15-story office building located in East Rutherford, NJ. Per the March 2016 rent roll, the property was 92.5% compared with 100% at issuance and 95.4% at YE 2015. The property is occupied by over 20 tenants representing a variety of industries. 9.1% of net rentable area (NRA) is scheduled to rollover in 2016. The largest concentration of lease rollover is in 2020 with approximately 30%. The loan is full term interest-only and matures in July 2024.
The largest FLOC (1.8% of the pool) is secured by a portfolio of three office buildings (110,104 sf) located in Needham and Newton, MA. Per the May 2016 rent roll, the portfolio was 98.5% occupied. Largest tenants include Dialogic Corporation, Inflexxion, Inc. and Caris Diagnostics, Inc. Two tenants, Dialogic Corporation (25% NRA), and Affiliated Physicians Group (7% NRA), representing a total of 32% of NRA are not expected to renew their leases after their 2016 expirations. Fitch's analysis included stresses on the existing net cash flow which assumed additional vacancy. The loan is interest-only until 2019 and matures in July 2024.
The two remaining FLOCs include a 29,715 sf mixed use property located in San Francisco, CA (1.2%) and a 117 room extended stay hotel located South Bend, IN (0.4%). The larger of the two is on the watchlist due to the loss of two tenants in early 2016 (42% of NRA). The other loan is on the watchlist due to declines in performance. As of YE 2015 and YTD March 2016, the servicer-reported DSCR was 0.85x and 0.48x, respectively.
RATING SENSITIVITIES
The Rating Outlooks remain Stable for all classes. Rating Outlooks on classes A-1 through E remain Stable due to the overall stable performance of the pool. Downgrades are possible with significant performance decline. Upgrades, while not likely in the near term, are possible with increased credit enhancement and overall improved pool performance.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch has affirmed the following ratings:
--$33 million class A-1 at 'AAAsf', Outlook Stable;
--$29.2 million class A-2 at 'AAAsf', Outlook Stable;
--$175 million class A-3A1 at 'AAAsf', Outlook Stable;
--$75 million class A-3A2 at 'AAAsf', Outlook Stable;
--$355.4 million class A-4 at 'AAAsf', Outlook Stable;
--$102.6 million class A-SB at 'AAAsf', Outlook Stable;
--$78.4 million class A-S* at 'AAAsf', Outlook Stable;
--$58.8 million class B* at 'AA-sf', Outlook Stable;
--$47.6 million class C* at 'A-sf', Outlook Stable;
--$184.9 million class EC* at 'A-sf', Outlook Stable;
--$848.5 million class X-A** at 'AAAsf', Outlook Stable;
--$28 million class X-C** at 'BB-sf', Outlook Stable;
--$61.6 million class D at 'BBB-sf', Outlook Stable;
--$28 million class E at 'BB-sf', Outlook Stable.
* The class A-S, class B and class C certificates may be exchanged for class EC certificates, and class EC certificates may be exchanged for the class A-S, class B and class C certificates.
** Notional amount and interest only.
Fitch does not rate the $35 million class NR certificates, the $12.6 million class F, the $14 million class G, the $15.1 million UHP, the $26.6 million interest only classes X-D or the $35 million interest only classes X-E certificates. Fitch previously withdrew its rating of the interest only class X-B.
Additional information is available at www.fitchratings.com.
Applicable Criteria
Counterparty Criteria for Structured Finance and Covered Bonds (pub. 18 Jul 2016)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=884963
Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 16 Jun 2016)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=882401
Global Structured Finance Rating Criteria (pub. 27 Jun 2016)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=883130
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
Related Research
JPMBB Commercial Mortgage Securities Trust 2014-C22 -- Appendix
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=753748
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1009254
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1009254
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
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