NEW YORK--(BUSINESS WIRE)--Fitch Ratings has downgraded three classes of J.P. Morgan Chase Commercial Mortgage Securities Corp. (JPMCC), commercial mortgage pass-through certificates, series 2001-CIBC2. A detailed list of rating actions follows at the end of this release.
KEY RATING DRIVERS
The downgrade of the class D certificates to 'Asf' from 'AAAsf' was primarily due to concerns with the two largest remaining loans (92% of the pool), including the continued underperformance of the largest loan, the Collin Creek Mall (86% of the pool).
As of the January 2015 distribution date, the pool's aggregate principal balance has been reduced approximately 93% to $67.4 million from $961.7 million at issuance. Currently, there are only six loans remaining in the pool, two of which (3.9%) are defeased. Interest shortfalls are affecting classes G through NR with cumulative unpaid interest totaling $2.7 million.
The Collin Creek Mall is secured by the non-anchor spaces (332,055 square foot) of a 1.1 million sf regional mall in Plano, TX. The shadow anchors include Amazing Jake, Macy's, JC Penney, and Sears, all of which are under long-term leases. Dillards, a former shadow anchor, vacated in January 2014 after its lease expiration.
The loan transferred to the Special Servicer in November 2014 due to imminent default. The borrower stated in a written notice that they would not be able to pay the loan off at maturity (maturity was extended five years to July 2016 from July 2011 when the loan was modified in February 2010) and was no longer able to continue paying the debt service due to the poor performance of the property. The loan is currently over 30 days delinquent. The Borrower has requested that the Lender consider taking the property back via a deed in lieu of foreclosure (DIL) and has offered to surrender ownership to the Dillard's box and three undeveloped out-parcels as additional collateral. The special servicer is analyzing its workout strategies. An updated appraisal draft is being finalized.
The property is facing fierce market competition from several newer shopping malls nearby. As of the September 2014 rent roll, the mall was 79.6% occupied and the collateral portion was 77.8% occupied. Thirty-two leases representing 29% of the collateral are scheduled to expire in 2015, including Lane Bryant (2.4% of the collateral pool), Express (2.2%) and Forever 21 (2%). Based on preliminary valuations, Fitch expects significant losses upon the liquidation of this loan. The servicer reported second quarter 2014 debt service coverage ratio (DSCR) was 0.60x, compared to 0.78x at year-end 2013 (YE13) and 1.75x at underwriting.
The second largest loan is an industrial property in Clearwater, FL. As of September 2014, the property was 79% occupied, compared to 82% at year-end 2013 and 96% at origination. The loan was previously modified, which extended the anticipated repayment date to May 2015. The final loan maturity remains at May 2026.
While class D has high credit enhancement and should continue to delever, interest shortfalls are a possibility, as is further downgrades, should the second largest loan transfer to the special servicer. According to Fitch's 'Criteria for Rating Caps and Limitations in Global Structured Finance Transactions', dated May 2014, ratings at 'AAAsf' and 'AAsf' should not incur interest shortfalls. The distressed classes (rated below 'B') may be subject to further rating actions as losses are realized.
Fitch has downgraded the following classes:
--$9.7 million class D to 'Asf' from 'AAAsf'; Outlook Negative;
--$28.9 million class E to 'CCsf' from 'Bsf'; RE 60%;
--$12 million class F to 'CCsf' from 'CCCsf'; RE0%;
Fitch has affirmed the following class:
--$16.8 million class G at 'Dsf'; RE0%.
Classes A-1 through C, as well as the interest-only class X-2, have paid in full. Classes H, J, K, L and M have been depleted due to losses and are affirmed at 'Dsf/RE0%'. Fitch does not rate NR class certificates. Fitch has previously withdrawn the rating on the Interest-only class X-1.
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 >> CMBS >> Criteria Reports
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', (Dec. 10, 2014);
'Global Structured Finance Rating Criteria' (Aug 4, 2014); Criteria for Rating Caps and Limitations in Global Structured Finance Transactions(May 2014)
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
Criteria for Rating Caps and Limitations in Global Structured Finance Transactions
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria