NEW YORK--(BUSINESS WIRE)--Fitch Ratings has upgraded one class, downgraded one distressed class, and affirmed 19 classes of J.P. Morgan Chase Commercial Mortgage Securities Trust commercial mortgage pass-through certificates series 2007-LDP12. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The upgrade is due to increasing credit enhancement from paydown including two of the previous top 15 loans at the time of the prior rating action. Fitch modeled losses of 12.4% of the remaining pool; expected losses on the original pool balance total 13.1%, including $152 million (6.1% of the original pool balance) in realized losses to date. Fitch has designated 31 loans (25.1%) as Fitch Loans of Concern, which includes 10 specially serviced assets (8.4%).
As of the November 2014 distribution date, the pool's aggregate principal balance has been reduced by 43.1% to $1.43 billion from $2.5 billion at issuance. Per the servicer reporting, two loans (0.6% of the pool) are defeased. Interest shortfalls are currently affecting classes D through NR.
The largest contributor to expected losses is the Liberty Plaza, a real estate owned (REO) asset (3% of the pool). The property is a 365,556 square foot (sf) community shopping plaza, anchored by a 24-hour Wal-Mart, Dicks Clothing & Sporting Goods and Super Fresh Food Market. The property was built in 1989, renovated in 1994, and is situated on a 33 acre pad. The loan transferred to special servicing in January 2013 due to imminent default. The largest tenant, Wal-Mart exercised an option to extend its lease through March 2015. Wal-Mart comprises 131,812 sf (34% of net rentable area [NRA] and 33% of net rental income). Per the special servicer, Wal-Mart has acquired the former Boscov's space at the adjacent Franklin Mills Mall and is in the process of building a supercenter and will vacate the center at lease expiration in March of 2015. The property is 94% occupied as of October 2014. The special servicer continues to search for replacements for Wal-Mart.
The next largest contributor to expected losses is the St. Joe - 150 W. Main loan (3.2%), which is secured by a 227,047 sf multi-tenant office building located in Norfolk, VA. The largest tenants are Kaufman & Canoles (28%), lease expiration July 31, 2022; SunTrust Bank (21%), lease expiration Dec. 31, 2018; CB Richard Ellis (7%), lease expiration Dec. 31, 2015; Wilbanks Smith (7%), lease expiration Dec. 31, 2021; Crenshaw Ware & Mart (6%), lease expiration May 31, 2022. The property is 81% occupied as of September 2014 with average rent $29 sf. Per REIS as of the third quarter of 2014 (3Q'14), the Norfolk submarket had a vacancy rate of 16.7% with average asking rent $19.28 psf. There is approximately 5% upcoming rollover in 2015. Per the master servicer, the borrower has indicated one tenant is expected to downsize a portion of their space and another will vacate at lease expiration in 2015. Additionally, a lease has been signed with a new tenant for the entire 12th floor with expected occupancy in September 2015.
The third largest contributor to expected losses is the specially-serviced BB&T Tower loan (2.2%), which is secured by an 18 story high rise office building consisting of 282,000 sf built in 1975, renovated in 1994, and located in Jacksonville, FL. The largest tenants are Branch Banking and Trust Co, with 46,831 sf comprising 16.6% of the Property's net rentable sf (nrsf), expiring Feb. 28, 2019, HDR Engineering, with 22,000 sf comprising 7.8% of the Property's nrsf, expiring Dec. 31, 2018, and Patriot Transportation Holdings, with 14,649 sf comprising 5.2% of the property's nrsf, expiring April 30, 2023. The loan was transferred to special servicing in May 2014 and no payments have been made on the loan since June 2014. The loan matured in July 2014. The special servicer is currently dual tracking foreclosure along with negotiation discussions with the Borrower. At securitization, the loan was underwritten to pro forma income with a 1.24x 'as stabilized' debt service coverage ratio (DSCR), while the 'as-is' DSCR was only 1.01x. Similarly, the true underwritten occupancy was 65.8%, but the loan was underwritten assuming a stabilized occupancy of 91%. The year-end (YE) 2013 financials reported a 0.81x DSCR and 1Q'14 DSCR was 1.04x with occupancy of 84%.
Rating Outlooks on classes A-3 through A-M remain Stable due to increasing credit enhancement and continued paydown. Further upgrades to class A-M are possible in the future provided loans within the top 15 with upcoming lease rollover stabilize.
Fitch downgrades the following classes as indicated:
--$28.2 million class C to 'CCsf' from 'CCCsf', RE 0%.
Fitch upgrades the following class as indicated:
--$250.5 million class A-M to 'Asf' from 'BBBsf', Outlook Stable.
Fitch affirms the following classes and revises REs as indicated:
--$18.4 million class A-3 at 'AAAsf', Outlook Stable;
--$601.7 million class A-4 at 'AAAsf', Outlook Stable;
--$23.7 million class A-SB at 'AAAsf', Outlook Stable;
--$182.8 million class A-1A at 'AAAsf', Outlook Stable;
--$197.2 million class A-J at 'CCCsf', RE 15%;
--$21.9 million class B at 'CCCsf', RE 0%;
--$21.9 million class D at 'CCsf', RE 0%;
--$12.5 million class E at 'Csf', RE 0%;
--$25 million class F at 'Csf', RE 0%;
--$28.2 million class G at 'Csf', RE 0%;
--$13.9 million class H at 'Dsf', RE 0%;
--$0 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 P at 'Dsf', RE 0%;
--$0 class Q at 'Dsf', RE 0%;
--$0 class T at 'Dsf', RE 0%.
The class A-1 and A-2 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 on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 10, 2014 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at 'www.fitchratings.com' under the following headers:
Structured Finance then CMBS then Criteria Reports
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (Aug. 4, 2014);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 10, 2014).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria