February 8, 2013 / 7:21 PM / 5 years ago

TEXT - Fitch cuts 13 classes of JPMCC 2007-CIBC20

(The following statement was released by the rating agency)
    Feb 8 - Fitch Ratings has downgraded 13 classes, removed two from Rating
Watch Negative and affirmed seven classes of J.P. Morgan Chase Commercial
Mortgage Securities Trust, (JPMCC) commercial mortgage pass-through certificates
series 2007-CIBC20 due to increased loss expectations associated with the
specially serviced assets and on performing loans with declines in performance
indicative of a higher probability of default. A detailed list of rating actions
follows at the end of this press release.

 

RATING SENSITIVITIES

 

Fitch modeled losses of 13.1% of the remaining pool; expected losses on the 
original pool balance total 13.5%, including $45.8 million or 1.8% of the 
original pool balance in realized losses to date. This is an increase from the 
previous modeled 11.6% of original pool balance, and is primarily attributed to 
declining valuations on the specially serviced assets. Fitch has designated 52 
loans (32.9%) as Fitch Loans of Concern, which includes 15 specially serviced 
assets (15.8%). 

 

As of the January 2013 distribution date, the pool's aggregate principal balance
has been reduced by 10.7% to $2.27 billion from $2.54 billion at issuance. No 
loans have defeased since issuance. Interest shortfalls are currently affecting 
classes L through NR.

 

The largest contributor to expected losses is the North Hills Mall loan (6.2% of
the pool), which is secured by a 576,431 square foot (sf) regional lifestyle 
center located in Raleigh, NC within the Raleigh-Durham-Chapel Hill MSA, 
referred to as 'The Research Triangle'. The property is anchored by J.C. Penney,
Regal Entertainment, REI, and Target (not part of the collateral). There is also
a 101,354 sf office component. The 200 room Renaissance Hotel is not part of the
collateral. The property has struggled with low cash flow and declining debt 
service since issuance. Although as of June 2012, the debt-service coverage 
ratio (DSCR) has shown improvement to 1.17x from 1.06x at year-end (YE) 2011 and
1.20x at issuance. The property is 98.3% occupied as of October 2012. There is 
approximately 10% of the net rentable scheduled to roll in 2014. Per REIS, as of
the third quarter (3Q) 2012, the Raleigh retail market had a vacancy rate of 
9.5% with asking rents at $18.57. The average in-line base rents at the property
are slightly above market. 

 

The next largest contributor to expected losses is the specially-serviced STF 
Portfolio (1.9%), originally secured at issuance by a portfolio of 19 properties
totaling 1.2 million sf located in McAllen, TX, El Paso, TX and Santa Theresa, 
NM. The loan transferred to special servicing in August 2010 for payment 
default. In July 2012, the special servicer foreclosed on 17 properties, the 
remaining two NM properties are expected to be foreclosed in February 2013. The 
special servicer is in discussions with 9 existing tenants for a renewal of 
approximately 96,891 sf and three new leases have been signed. There are eight 
properties currently remaining in the portfolio. 

The third largest contributor to expected losses is the specially-serviced 
Baldwin Park Retail asset (1.8%), which is secured by an 182,464 sf retail 
property located in Orlando, FL. The property is anchored by a Publix, CVS, and 
other small retail units. The asset transferred into special servicing in June 
2010 for payment default. Foreclosure occurred in November 2012. As of December 
2012, the property was 73.6% occupied with a DSCR of 0.34x. Per REIS as of the 
fourth quarter (4Q) 2012, the Orlando retail market had a vacancy rate of 13.7%.
The Northeast submarket had vacancy rates of 11.5% and 12.3% for anchored and 
non-anchored retail. 

    

Fitch downgrades and removes from Rating Watch Negative the following two 
classes:

--$219.3 million class A-M to 'Asf' from 'AAAsf'; Outlook Stable;

--$35 million class A-MFX to 'Asf' from 'AAAsf'; Outlook Stable.

In addition Fitch downgrades and assigns Rating Outlooks or Recovery Estimates 
(REs) to the following classes as indicated:

--$152.6 million class A-J to 'Bsf' from 'BBB-sf'; Outlook Negative;
--$31.8 million class B to 'CCCsf' from 'BBsf'; RE 100%;
--$25.4 million class C to 'CCCsf' from 'Bsf'; RE 100%;
--$28.6 million class D to 'CCsf' from 'CCCsf'; RE 10%;
--$22.3 million class E to 'CCsf' from 'CCCsf'; RE 0%;
--$22.3 million class F to 'CCsf' from 'CCCsf'; RE 0%;
--$25.4 million class G to 'CCsf' from 'CCCsf'; RE 0%;
--$35 million class H to 'Csf' from 'CCsf'; RE 0%;
--$31.8 million class J to 'Csf' from 'CCsf'; RE 0%;
--$28.6 million class K to 'Csf' from 'CCsf'; RE 0%.
 --$1.6 million class N to 'D' from 'Csf'; RE 0%.

Fitch affirms the following classes:

 

--$14 million class A-2 at 'AAAsf'; Outlook Stable;
--$208.6 million class A-3 at 'AAAsf'; Outlook Stable;
--$991.7 million class A-4 at 'AAAsf'; Outlook Stable;
--$73.1 million class A-SB at 'AAAsf'; Outlook Stable;
--$281.6 million class A-1A at 'AAAsf'; Outlook Stable;
--$31.8 million class L at 'Csf'; RE 0%;
--$9.5 million class M at 'Csf'; RE0%;

The class A-1 certificates have paid in full. Fitch does not rate the class P, 
Q, T and NR certificates. Fitch previously withdrew the ratings on the 
interest-only class X-1 and X-2 certificates.

 (Caryn Trokie, New York Ratings Unit)

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