Fitch Takes Various Actions on JPMCC 2003-ML1

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has upgraded two, affirmed three, and downgraded one class of J.P. Morgan Chase Commercial Mortgage Securities Corp. (JPMCC) commercial mortgage pass-through certificates series 2003-ML1. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrades to class H and class J are the result of increased credit enhancement (CE) due to a greater number of defeased loans (34% of the current balance), as well as continued amortization since prior review. The affirmations for classes K and L are based on sufficient CE given the high concentration with only 13 assets remaining, two of which (40%) are specially serviced and real estate owned (REO). The performance of non-specially serviced loans in the pool has been stable.

The downgrade for class N is the result of higher certainty of realized losses for the two specially serviced assets. Fitch modeled losses of 26.9% of the remaining pool; expected losses on the original pool balance total 2.7%, including $14.7 million (1.6% of the original pool balance) in realized losses to date.

As of the January 2016 distribution date, the pool's aggregate principal balance has been reduced by 95.8% to $38.7 million from $929.8 million at issuance. Per the servicer reporting, five loans totalling $13.1 million (34% of the pool) are defeased. Interest shortfalls are currently affecting classes N through NR.

The largest contributor to modeled losses is the REO High Ridge Center (26.8%), a 260,664 square foot (sf) shopping center located in Racine, WI. The loan transferred to the special servicer in December 2012 when the borrower requested a modification to the loan terms citing cash flow issues. Following the foreclosure process, the trust took title to the property in February 2015. The property manager continues to attempt to lease the vacant anchor space once occupied by Office Max (10% net rentable area). The servicer reported a net operating income (NOI) debt service coverage ratio (DSCR) of 0.96x as of year-end (YE) 2014. As of the September 2015 rent roll, occupancy at the property stood at 77%.

The second largest contributor to modeled losses is the REO Crosspointe Plaza (13.2%), a 93,677 sf retail center located in Naugatuck, CT. The borrower failed to make the balloon payment due in January 2013 and the trust took title to the property in July 2014. As of March 2015, occupancy at the property was 40%. The special servicer plans to backfill the anchor space, but details on the timeframe for disposition are unknown.

RATING SENSITIVITIES

The Rating Outlooks on classes H, J and K remain Stable as credit enhancement is high and downgrades are not expected. Additional upgrades were not considered due to the high percentage of specially serviced assets, unknown disposition timing, and lack of significant upcoming paydown. The Rating Outlook on class L is Negative as downgrades are possible if expected losses on the specially serviced assets increase. Further downgrades to classes M and N will occur when losses are realized.

DUE DILIGENCE USAGE

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

Fitch upgrades the following classes as indicated:

--$4.6 million class H to 'AAAsf' from 'AAsf'; Outlook Stable;

--$10.5 million class J to 'AAAsf' from 'Asf'; Outlook Stable.

Fitch affirms the following classes as indicated:

--$5.8 million class K at 'BBBsf'; Outlook Stable;

--$5.8 million class L at 'BBsf'; Outlook Negative;

--$4.6 million class N at 'Csf'; RE 0%.

Fitch downgrades the following class as indicated:

--$7 million class M to 'Csf' from 'CCsf'; RE 30%.

The class A-1, A-2, B, C, D, E, F, G and X-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-1 certificates.

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. 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=998999

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=998999

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/20160203006618/en/

Fitch Ratings
Primary Analyst
Zachary Johnson
Associate Director
+1-646-582-4815
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
[email protected]

Source: Fitch Ratings

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