Fitch Ratings downgrades and assigns Distressed Recovery (DR) ratings and Rating Outlooks to the following classes of J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC12. The rates of DR ratings reflect the increased loss expectations on the specially serviced loans since Fitch’s last rating action. The Rating Outlooks reflect the likely direction of any rating changes over the next one to two years.
–$24.4 million class G to ‘BBB-‘ from ‘BBB’; Outlook Stable;
–$29.8 million class H to ‘BB’ from ‘BBB-‘; Outlook Stable;
–$8.1 million class J to ‘BB-‘ from ‘BB+’; Outlook Stable;
–$8.1 million class K to ‘B’ from ‘BB’; Outlook Stable;
–$8.1 million class L to ‘B-‘ from ‘BB-‘; Outlook Negative;
–$5.4 million class M to ‘CCC/DR1’ from ‘B’;
–$8.1 million class N to ‘CC/DR4’ from ‘B-‘;
–$5.4 million class P to ‘C/DR6’ from ‘CCC/DR1’;
–$50 million class UHP to ‘B-‘ from ‘BB’; Outlook Stable.
In addition, Fitch affirms the following classes:
–$152.4 million class A-2 at ‘AAA’; Outlook Stable;
–$163.6 million class A-3A1 at ‘AAA’; Outlook Stable;
–$122.9 million class A-3A2 at ‘AAA’; Outlook Stable;
–$200 million class A-3B at ‘AAA’; Outlook Stable;
–$649.3 million class A-4 at ‘AAA’; Outlook Stable;
–$137.4 million class A-SB at ‘AAA’; Outlook Stable;
–$216.7 million class A-M at ‘AAA’; Outlook Stable;
–$162.5 million class A-J at ‘AAA’; Outlook Stable;
–Interest only class X-1 at ‘AAA’; Outlook Stable;
–Interest only class X-2 at ‘AAA’; Outlook Stable;
–$43.3 million class B at ‘AA’; Outlook Stable;
–$19 million class C at ‘AA-‘; Outlook Stable;
–$32.5 million class D at ‘A’; Outlook Stable;
–$27.1 million class E at ‘A-‘; Outlook Stable;
–$24.4 million class F at ‘BBB+’; Outlook Stable.
The $27.1 million class NR is not rated by Fitch. Class A-1 has paid in full.
The downgrade of class UHP is due to a sustainable increase in ground rent expense for the Universal Hotel Portfolio (4.7%). The Universal Hotel Portfolio consists of three hotels in Orlando, FL, with a total of 2,400 keys. The $100 million A-note is pooled and held in the trust. The $50 million B-note, non-pooled but in the trust, collateralizes class UHP. Expenses at the properties have increased substantially since issuance, mainly driven by an increase in ground rent. Operating performance at the properties is in line with issuance. The trailing twelve month combined occupancy for the hotels as of September 2008 was 78.1%, compared to 81.9% at issuance. Average daily rate and revenue per available room for the same period were $228 and $178 compared to issuance at $208 and $171, respectively.
As of the November 2008 distribution date, the transaction has paid down 4.1% to $2.1 billion from $2.2 billion at issuance. Four loans, 2.9% of the pool, have defeased.
Currently, Fitch has identified 20 Loans of Concern (7.3%), including three specially serviced assets (1.5%). Ten additional loans (4.2%) have been identified as Loans of Concern since Fitch’s last rating action.
The largest specially serviced loan (0.7%) is secured by a 34,938 square foot (sf) retail property in St. Thomas, Virgin Islands. The asset has been real estate owned (REO) since August 2008. The property suffered from a deteriorating retail environment stemming from a reduction in vacation travel. The most recent appraisal value indicates significant losses upon disposition.
The second largest specially serviced loan is collateralized by an 89,080 sf suburban office building in New London, CT (0.4%) that transferred in February 2007. Current occupancy at the property is 60% and the loan is 90+ days delinquent. The servicer is working to stabilize the asset and is pursuing a judicial foreclosure.
The third specially serviced loan (0.4%) is an REO office property located in Buffalo, NY, that transferred in September 2007 due to monetary default. Losses are expected on all three assets.
Two loans, 4250 North Fairfax Drive (2.2%) and 450 Roxbury Drive (1.2%) maintain investment grade shadow-ratings. Watertower Place at Celebration has paid in full. Fitch no longer considers Universal Hotel Portfolio to have characteristics consistent with an investment grade shadow rating due to the sustainable increase in expenses since issuance.
The largest shadow rated loan, 4250 North Fairfax Drive, is an office property located in Arlington, VA, that reported first quarter 2008 occupancy of 100%, up from issuance occupancy of 98.6% and an increase in NOI of 26% since issuance. The second loan, 450 Roxbury Drive, is a medical office property in Los Angeles, CA. Occupancy as of YE 2007 was 100%, an increase from the issuance occupancy of 88.4%.
None of the non-defeased loans in the pool are scheduled to mature in 2008 or 2009 and 10 non-defeased loans (8.1%) are scheduled to mature in 2010.
L.D.