Fitch Affirms JP Morgan 2008-C2

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed 21 classes of J.P. Morgan Chase Commercial Mortgage Securities Trust series 2008-C2. A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The affirmations reflect sufficient credit enhancement relative to Fitch expected losses. Fitch modeled losses of 16.8% of the remaining pool; expected losses on the original pool balance total 23.9%, including $153.7 million (13.2% of the original pool balance) in realized losses to date. Fitch has designated 17 loans (38.4%) as Fitch Loans of Concern, which includes six specially serviced assets (21.2%).

As of the June 2015 distribution date, the pool's aggregate principal balance has been reduced by approximately 36.3% to $760 million from $1.16 billion at issuance. There are 63 loans remaining of the original 80. Interest shortfalls are currently affecting classes A-M through T.

The largest contributor to expected losses is the Westin Portfolio, the current pool's largest loan (15.3%). The loan is secured by two Westin resort hotels: the 487-room Westin La Paloma in Tucson, AZ, with a 27-hole Jack Nicklaus golf course and spa, and the 416-room oceanfront Westin Hilton Head, in Hilton Head, SC, which features a Westin Heavenly Spa, the first 'Heavenly Spa' opened in the U.S. Both resorts offer numerous restaurants, pools and over 100,000 sf of meeting space. The loan, which transferred to special servicing soon after securitization (due to a borrower bankruptcy), fell short of performance expectations as a result of the recession and the impact it had on the hotels' performance. In early 2012, a loan modification was completed which required the newly formed sponsor, Southwest Value Partners, to timely perform the property improvement plans (PIP) agreed upon in the reorganization and approved by Westin.

The sponsor has completed significant renovations on both properties over the last few years, and the properties appear attractive and well kept. The sponsor continues to work on stabilizing performance and growing room revenue through Westin's strong reservation system. The franchise agreement with the Westin Hilton Head expires on Dec. 31, 2019, and the agreement with Westin La Paloma expires on Dec. 31, 2028.

Updated valuations for the properties have not been made available, largely due to the lengthy court proceedings. Additionally, Fitch modeled a conservative value in its analysis, but took into account the significant capital investment both properties recently received, as well as the continued strong performance of the U.S. lodging industry. Fitch will closely monitor any performance updates including updated valuations as it becomes available.

The next contributor to expected losses is a specially serviced loan (3.3%) secured by a 252,759 sf portfolio of three office-flex properties in Norcross, GA. A receiver was appointed in late 2013, and the asset became real estate owned (REO) in early 2014. The special servicer continues efforts to stabilize the property with a focus on leasing up vacant space. The subject's market remains weak however, and competition for tenants is high among landlords.

RATING SENSITIVITIES

The Rating Outlooks for classes A-4, A-4FL, A-SB, and A-1A remain Negative based on a lack of updated values for certain specially serviced loans. Additionally, dispositions from previously liquidated loans have eroded credit support to the lower classes in the trust. Downgrades are possible if expected losses increase or if these classes are affected by repeated interest shortfalls.

DUE DILIGENCE USAGE

No third party due diligence was provided or reviewed in relation to this rating action.

Fitch affirms the following Classes and Outlooks as indicated:

--$333.7 million class A-4 at 'Asf'; Outlook Negative;

--$136.4 million class A-4FL at 'Asf'; Outlook Negative;

--$23.8 million class A-SB at 'Asf'; Outlook Negative;

--$52.8 million class A-1A at 'Asf'; Outlook Negative;

--$116.6 million class A-M at 'CCsf'; RE 50%;

--$61.2 million class A-J at 'Csf'; RE 0%;

--$14.6 million class B at 'Csf'; RE 0%;

--$3.7 million class C at 'Dsf'; RE 0%;

--$0 class D at 'Dsf'; RE 0%;

--$0 class E at 'Dsf';; RE 0%;

--$0 class F at 'Dsf'; RE 0%;

--$0 class G at 'Dsf'; RE 0%;

--$0 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%.

Class 'NR' is not rated.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (pub. 10 Dec 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=988362

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=988362

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150722006430/en/

Fitch Ratings
Primary Surveillance Analyst
Christopher Bushart
Senior Director
+1-212-908-0606
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Britt Johnson
Senior Director
+1-312-606-2341
or
Media Relations
Sandro Scenga, +1 212-908-0278
[email protected]

Source: Fitch Ratings

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• In HelloNation, Pool Expert James White Explains How to Choose the Right Pool Finish and Tile for Georgia Heat, Maintenance, and Long-Term Durability
• Truist cuts Norwegian Cruise Line to Hold on rising promotional activity
• Finland's Aalto Works joins the UNESCO World Heritage List, with five sites in Helsinki