Fitch Upgrades JPMCC 2004 PNC1

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has upgraded two and affirmed 11 classes of J.P. Morgan Chase Commercial Mortgage Securities Corp. series 2004-PNC1 commercial mortgage pass-through certificates (JPMCC 2004-PNC1). A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrades reflect an increase in credit enhancement due to principal paydown as a result of better than expected resolutions on the specially serviced loans and continued amortization of the collateral since Fitch's last rating action. Fitch applied additional stress scenarios in its analysis considering the adverse selection of the pool. The transaction has paid down 86.2% in principal balance. Currently there are only 16 loans remaining in the transaction, compared to 101 at issuance. Fitch modeled losses of 12% of the remaining pool; expected losses on the original pool balance total 5.6%, including $49.6 million (4.5% of the original pool balance) in realized losses to date. Fitch has designated three loans (25.6%) as Fitch Loans of Concern, including one specially serviced asset (14.2%). Two loans (18.1%) are defeased.

As of the July 2015 distribution date, the pool's aggregate principal balance has been reduced by 90.8% to $101.4 million from $1.1 billion at issuance. Interest shortfalls totaling $2.74 million are currently affecting classes H, L, M, N, P and NR.

The largest contributor to expected losses is a 146,279 square foot retail center (10.5%) located in Springdale, OH. The property is currently 100% occupied by three tenants. The largest tenant, Dick's Sporting Goods, which occupies 43% of the property, will not renew its lease when it expires in October 2015. The other two tenants have their leases expiring in January 2016. Average rents at the property remain below market as the borrower has previously given rent concessions in order to maintain occupancy. The loan has passed its anticipated repayment date (ARD) of May 2014. The servicer reported year end (YE) 2014 debt service coverage ratio (DSCR) was 1.05x compared to 0.85x at YE2012 and 1.52x at issuance.

The second largest contributor to Fitch's modeled losses is an 180,000 square foot (sf) suburban office property (14.2%) located in Farmington Hills, MI. The property is solely occupied by Jervis Webb Co with its lease expiring in September 2017. The loan transferred to the special servicer in October 2013 due to imminent payment default after the borrower was unable to obtain sufficient financing prior to the April 2014 maturity date. The special servicer has reached a settlement agreement with borrower for a deed in lieu.

RATING SENSITIVITIES

The ratings on the class B through E notes are expected to remain stable as no near-term rating actions are anticipated. In addition, the distressed classes (rated below 'B') may be subject to further rating actions as losses are realized.

Fitch has upgraded the following classes:

--$13.7 million class C to 'AAAsf' from 'Asf'; Outlook Stable;

--$17.8 million class D to 'Asf' from 'BBBsf'; Outlook Stable.

Fitch has affirmed the following classes:

--$20.7 million class B at 'AAAsf'; Outlook Stable;

--$11 million class E at 'Bsf'; Outlook Stable;

--$16.5 million class F at 'CCCsf'; RE 100%;

--$11 million class G at 'CCsf'; RE 80%;

--$10.8 million 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-3, A-4, and A-1A notes have paid in full. Fitch does not rate the class NR notes. Fitch has previously withdrawn the rating on the interest-only class X 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. 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=988099

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=988099

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/20150717005444/en/

Fitch Ratings
Primary Surveillance Analyst
Amy Gan
Director
+1-212-908-9143
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, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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