CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed 13 classes of JP Morgan Chase Commercial Mortgage Securities Trust (JPMBB 2013-C17) commercial mortgage pass-through certificates series 2013-C17. A detailed list of rating actions follows at the end of this release.
KEY RATING DRIVERS
The affirmations are based on overall stable performance of the underlying collateral pool. As of year-end 2015, aggregate pool-level NOI has improved 4.8% from 2014 and remains 2.5% higher than issuance. As of the September 2016 remittance, the pool's aggregate principal balance has been reduced by 2.4% to $1.056 billion from $1.082 billion at issuance.
There have been no delinquent, specially serviced or defeased loans since issuance. Nine loans appear on the servicer's watchlist (9.3%) due to declines in Debt Service Coverage Ratio (DSCR), large tenant lease expiration, and a major casualty event. In particular, The Palms at Westheimer (2.2% of the pool) was affected by two incidences of fire in December 2015 displacing residents and destroying multiple units. The borrower has stated 52 of 798 units were taken off-line and are in the process of being restored. Since the fire, the borrower has made timely payments and an insurance check was deposited into a loss draft account. The borrower has sufficient loss business coverage extending for 12 months.
The Dolfield Business Park loan (0.9%) is a notable Fitch Loan of Concern due to a substantial decline in occupancy to 39% from 91% due to several large tenants vacating at lease expiration. The loan is secured by a 71,400 sf office property in Owings Mills, MD. The borrower has several parties interested in the vacant space.
The pool has two properties, Rivertowne Commons and Springfield Plaza (7.2%) with exposure to K-Mart as a tenant. K-Mart represents at least 20% of the NRA at each property. Although neither store was listed on any recent closing list, the exposure remains a concern based on the distressed credit of the retailer and pattern of frequent store closures.
This pool has an above-average concentration of multifamily properties, which represent 25.6% of the total pool balance. This is above the average concentrations of 12.2% for the 2013 vintage for Fitch-rated transactions. Additionally, this transaction has a below-average concentration of hotel properties, which represent 8.5% of the total pool balance; the 2013 vintage average hotel concentration was 14.2%.
The largest loan in the pool, Jordan Creek Town Center (10.9% of the pool), is a 10-year amortizing loan. The loan is subject to a $100 million pari passu note which is part of the JPMCC 2014-C18 transaction. The collateral consists of 503,034 sf of a 1.1 million-sf regional mall located in West Des Moines, IA. The property is anchored by Dillard's (non-collateral), Younkers (non-collateral) and Scheels All Sports. Sponsored by GGP, the loan is performing in line with expectations at issuance. As of June 2016, the mall was 94% occupied, compared to 95% at issuance. The servicer reported second quarter 2016 (2Q16) DSCR was 1.66x, compared to 1.63x at year-end (YE) 2015 and 1.59x at issuance. The Des Moines market is experiencing substantial growth with numerous development projects slated for completion including new retail developments, residential projects and several billion-dollar data centers planned by Google, Microsoft and Facebook.
The second largest loan, EIP National Portfolio (8.8%), is secured by seven industrial buildings encompassing 3.2 million sf. The properties are located in six states, with two in Ohio and one each in Illinois, Florida, Pennsylvania, Texas and Michigan. The portfolio is currently leased to seven tenants: Toys 'R' Us, Staples (rated 'BBB-'), Rite-Aid, International Paper Company, Plastipak Packaging, HEB Grocery Company and Commonwealth, Inc. As of March 2016, the portfolio was 100% occupied with reported DSCR of 1.72x. Three tenants (50% of NRA) have extended lease terms since issuance, including the largest tenant in the portfolio, Toys 'R' Us (20%), and the second largest tenant, Staples (17%) which renewed for seven and 10 years, respectively. The Toys 'R' Us at the Youngstown, OH location was replaced by HMS Manufacturing Co. on a lease through 2022. Rite-Aid (13%) also renewed for five years, which mitigates the risk of closure due to the proposed acquisition of Rite-Aid by Walgreens Boots Alliance.
The third largest loan, The Aire (8.4%), is secured by a 43-story luxury multifamily building located on the Upper West Side of Manhattan. The property is a 310-unit, 42-story luxury residential building constructed in 2010 that features numerous amenities and high-end finishes. Lincoln Center and The Julliard School are located across the street from The Aire, and Central Park, Riverside Park and The Shops at Columbus Circle are within walking distance. The loan is subject to a $135 million pari passu note, which is part of the JPMCC 2013-C16 transaction. The collateral is performing in line with underwritten expectations with occupancy of 95% (as of June 2016) and second quarter 2016 DSCR of 1.77x, compared to the 92% occupancy and 1.16x DSCR at issuance. According to Reis' 2Q16 report, the Upper West Side submarket of Manhattan had an apartment vacancy rate of 4.3% with average asking rents of $5,006. The subject is performing in-line with the submarket.
Rating Outlooks for all classes remain Stable due to overall stable performance of the pool and continued amortization. Upgrades may occur with improved pool performance and significant paydown or defeasance. Downgrades to the classes are possible should overall pool performance decline. Fitch will continue to monitor the performance of the properties with exposure to K-Mart and the potential for closure.
USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10
Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.
Fitch affirms the following classes:
--$35.9 million class A-1 at 'AAAsf'; Outlook Stable;
--$67.6 million class A-2 at 'AAAsf'; Outlook Stable;
--$210 million class A-3 at 'AAAsf'; Outlook Stable;
--$319.1 million class A-4 at 'AAAsf'; Outlook Stable;
--$98.6 million class A-SB at 'AAAsf'; Outlook Stable;
--$83.9 million** class A-S at 'AAAsf'; Outlook Stable;
--$815.1 million* class X-A at 'AAAsf'; Outlook Stable;
--$62.2 million** class B at 'AA-sf'; Outlook Stable;
--$47.3 million** class C at 'A-sf'; Outlook Stable;
--$193.4 million** class EC at 'A-sf'; Outlook Stable;
--$48.7 million class D at 'BBB-sf'; Outlook Stable;
--$21.6 million class E at 'BBsf'; Outlook Stable;
--$12.2 million class F at 'Bsf'; Outlook Stable.
* Notional amount and interest-only.
** Class A-S, B and C certificates may be exchanged for a related amount of class EC certificates, and class EC certificates may be exchanged for class A-S, B and C certificates
Fitch does not rate the class NR and X-C certificates. Fitch previously withdrew the rating on the interest-only class X-B certificates.
Additional information is available at www.fitchratings.com.
Counterparty Criteria for Structured Finance and Covered Bonds (pub. 01 Sep 2016)
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)
J.P. Morgan Chase Commercial Mortgage Securities Trust 2013-C17 -- Appendix
Dodd-Frank Rating Information Disclosure Form
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