Fitch Downgrades JPMCC 2005-CIBC12

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has downgraded two classes and affirmed 12 classes of J.P. Morgan Chase Commercial Mortgage Securities Corp., series 2005-CIBC12. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The downgrades are the result of higher expected losses since Fitch's last rating action. The pool has become concentrated with only 13 loans remaining.

The transaction has experienced 92.8% of collateral reduction since issuance, which includes $182.2 million (8.2% of the original pool balance) in realized losses to date. There are 13 loans remaining in the pool, four of which (50.3% of pool balance) are specially serviced. Among the specially serviced loans are the largest two loans in the pool, which account for 23.7% and 20.8% of pool balance, respectively. One loan is defeased. Interest shortfalls currently reach up to class D.

The largest contributor to expected loss is the Fort Steuben Mall Loan. This loan transferred to special servicing in February 2016, after the sponsor ceased funding shortfalls. This loan is collateralized by the 686,000 square foot (sf) portion of an 813,000 sf enclosed mall in Steubenville, OH, just west of the Ohio River. The anchor tenants are Sears, J.C. Penney, Macy's (not collateral), Wal-Mart and Carmike Cinemas. Both Sears and J.C. Penney reflect lease expirations in 2016. Sears has announced it will close this store in June. J.C. Penney has renewed its lease through 2021. YE 2015 Debt Service Coverage Ratio (DSCR) was 1.00x and has ranged from 0.96x to 1.01x between YE 2015 and YE 2013. The special servicer has filed foreclosure proceedings and disposition of the asset is the current workout strategy.

The second largest contributor to expected losses is a 261,000 sf retail center located in South Brunswick, NJ. The loan transferred to special servicing in August 2014 for payment default and later failed to pay off at maturity. The default followed the July 2014 lease expiration of Stop & Shop, one of the property's largest tenants, which closed its store at this location. Foreclosure proceedings have been filed and all cash flow is currently being swept into a borrower-controlled lockbox. Notably, evidence of new environmental concerns was recently discovered at the property. The special servicer is in the process of obtaining an updated environmental report.

The third largest contributor to expected losses is the Atrium Executive Plaza loan. This loan is collateralized by a 93,000 sf office property located in Plantation, FL, near Fort Lauderdale. The loan transferred to special servicing January 2015 due to imminent maturity default. Since then the Borrower has attempted, unsuccessfully, to sell the property. The foreclosure process was paused as a result of a recent attempted short sale. As the sale never materialized, the special servicer is continuing to pursue foreclosure. As of March 2016 occupancy was 51.5% and YTD DSCR was 0.66x. Though insufficient, occupancy and coverage are both up as a result of a new tenant which began occupancy in 2015 and accounts for 15.7% of net rentable area.

RATING SENSITIVITIES

The Rating Outlook on class A-J is Negative given the potential for higher losses related to the specially serviced loans, particularly the Fort Steuben Mall. Additionally, the pool is subject to risk related to single tenant exposure. Downgrades would be considered in the event of higher than expected loss severities related to the specially serviced loans or deterioration related to the performing loans. Though unlikely, upgrades would be considered in the event of improved loan-level performance or lower than expected realized loss severities.

DUE DILIGENCE USAGE

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

Fitch downgrades the following class and assigns Recovery Estimates (RE) as indicated:

--$43.3 million class B to 'CCsf' from 'Bsf'; RE 95%;

--$18.9 million class C to 'Csf' from 'CCCsf'; RE 0%.

In addition, Fitch has affirmed the following classes and revised Rating Outlooks as indicated:

--$162.5 million class A-J at 'Asf'; Outlook to Negative from Stable;

--$32.5 million 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%.

The class A-1, A-2, A-3A1, A-3A2, A-3B, A-SB, A-4, A-M, and UHP certificates have been paid in full. Fitch does not rate the Class NR certificate. Fitch withdrew the ratings on the interest-only Class X-1 and X-2 certificates.

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

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 28 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748781

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

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

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1005879

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1005879

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/20160610005453/en/

Fitch Ratings
Primary Analyst
Robert Buckley, +1-312-368-5447
Analyst
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Committee Chairperson
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
[email protected]

Source: Fitch Ratings

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