TEXT-S&P puts 4 JPMorgan Mortgage 2006-fl1 ratings on watch negative

Tue Dec 18, 2012 3:24pm EST

OVERVIEW
     -- We placed our ratings on four classes from JPMorgan Chase Commercial 
Mortgage Securities Corp.'s series 2006-FL1, a U.S. CMBS transaction, on 
CreditWatch with negative implications.
     -- The CreditWatch placements reflect our expectations of additional 
interest shortfalls on these classes due to an appraisal reduction amount that 
we expect to be affected on the sole remaining collateral in the trust as 
early as the next reporting cycle. 
 
NEW YORK (Standard & Poor's) Dec. 18, 2012--Standard & Poor's Ratings Services 
today placed its ratings on four classes of commercial mortgage pass-through 
certificates from JPMorgan Chase Commercial Mortgage Securities Corp.'s series 
2006-FL1, a U.S. commercial mortgage-backed securities (CMBS) transaction, on 
CreditWatch with negative implications (see list). 

The negative CreditWatch placements reflect our expectations of additional 
interest shortfalls on these classes due to an appraisal reduction amount 
(ARA) that we expect to be affected on the sole remaining specially serviced 
collateral, the Independence Mall loan, in the trust as early as the next 
reporting cycle. According to the special servicer, C-III Asset Management LLC 
(C-III), an updated appraisal value has recently been finalized. C-III stated 
that it is currently working on the ARA calculation based on the recent 
appraisal value. Standard & Poor's believes that there likely will be a 
significant decline in the value of the property, in view of the continued 
decline in occupancy and expected decrease in net cash flow (see below for 
details). 

As of the Dec. 17, 2012, trustee remittance report, the trust consisted of one 
remaining floating-rate amortizing loan indexed to one-month LIBOR, the 
Independence Mall loan. The one-month LIBOR rate was 0.208% according to the 
Dec. 2012 trustee remittance report. 

The Independence Mall loan has a trust and whole-loan balance of $71.2 million 
and a total reported trust exposure of $72.0 million. The loan was transferred 
to the special servicer on Aug. 27, 2012, due to its impending maturity. The 
loan matures on Feb. 9, 2013. The payment status of the loan is currently 
reported as 30 days delinquent. C-III indicated that it is currently waiting 
on the borrower's proposal for a loan modification. The loan is secured by 
679,705 sq. ft. of an 830,158-sq.-ft. regional mall in Kingston, Mass. The 
master servicer, Wells Fargo Bank N.A., reported a 0.96x debt service coverage 
for the three months ended March 31, 2012, and occupancy for the collateral 
dropped to 61.4%, according to the Sept. 30, 2012, rent roll, following H&M 
Group's vacancy (34,000 sq. ft.) in 2012, compared with 67.5% as of the Dec. 
31, 2011, rent roll. Anchor tenants in the collateral include Target Corp. 
(126,000 sq. ft.), Sears holding Corp. (79,441 sq. ft.), and Regal Cinema 
(58,115 sq. ft.), according to the September 2012 rent roll. The loan 
amortizes on a 20-year schedule. 

Standard & Poor's will resolve the CreditWatch negative placements as more 
information regarding the potential workout of the loan becomes available and 
after we review the credit characteristics of the remaining collateral in the 
trust as well as available liquidity remaining in the trust. If we lower our 
rating on class G below AA- (sf), we will withdraw our 'AAA (sf)' rating on 
the class X-2 interest-only (IO) certificates in accordance with our IO 
criteria. 

STANDARD & POOR'S 17G-7 DISCLOSURE REPORT

SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating 
relating to an asset-backed security as defined in the Rule, to include a 
description of the representations, warranties and enforcement mechanisms 
available to investors and a description of how they differ from the 
representations, warranties and enforcement mechanisms in issuances of similar 
securities. The Rule applies to in-scope securities initially rated (including 
preliminary ratings) on or after Sept. 26, 2011.

If applicable, the Standard & Poor's 17g-7 Disclosure Reports included in this 
credit rating report are available at 
"RELATED CRITERIA AND RESEARCH

     -- JPMorgan Chase Commercial Mortgage Securities Series 2006-FL1 Ratings 
Raised On Four Classes; Seven Affirmed, March 22, 2012
     -- Global Methodology For Rating Interest-Only Securities, April 15, 2010
     -- Rating U.S. CMBS In The Face Of Interest Shortfalls, Feb. 23, 2006
 
RATINGS PLACED ON CREDITWATCH NEGATIVE

JPMorgan Chase Commercial Mortgage Securities Corp.
Commercial mortgage pass-through certificates series 2006-FL1
              Rating
Class     To                    From           
G         AA- (sf)/Watch Neg    AA- (sf)   
H         A-(sf)/Watch Neg      A- (sf)
J         BB (sf)/Watch Neg     BB (sf)
K         CCC (sf)/Watch Neg    CCC (sf)