Fitch Affirms JPMCC 2011-C4
KEY RATING DRIVERS
The affirmations reflect the stable performance of the underlying collateral pool. There have been no watchlist or specially serviced loans since issuance. As of the March 2015 distribution date, the pool's aggregate principal balance has been reduced by 10.6% to \$1.3 billion from \$1.45 billion at issuance. Per the servicer reporting, one loan (0.3% of the pool) is defeased. Interest shortfalls, though minimal, are currently affecting class NR.
The largest loan, Two Allen Center (14.5% of pool), is secured by a 36-story, 993,356 square foot (sf) office building located in downtown Houston, TX. The property is part of the Allen Center complex that comprises three office buildings and two attached parking garages. The Sponsor is TRZ Holdings LLC, an affiliate of Brookfield Properties Corp. The Two Allen Center is a multi-note loan; both are part of the JPMCC 2011-C4 transaction with a total debt load of \$191.3 million.
The largest tenant, Devon Energy, occupies 52% of the net rentable area (NRA) with a maturity date in 2020. Devon Energy Corporation is rated BBB+; Outlook Stable by Fitch as of Oct. 23, 2014. The property continues to perform in line with underwriting expectations with a year-end net operating income debt service coverage ratio (NOI DSCR) of 2.04x.
The second largest loan, Newport Centre (14.4%), is secured by 972,484 sf of a 1.15 million sf regional mall located in Jersey City, NJ. The mall is anchored by Macy's, JC Penney (non-collateral), Sears, and Kohl's. Major tenants include AMC Lowes Theatre, Pay Half, and Forever XXI. Year-end (YE) 2014 in-line sales improved to approximately \$555 per square foot (psf) from \$472 psf at issuance. The property reported a 2014 NOI DSCR of 1.92x.
The fourth largest loan, the Rincon Center (7.7%), is secured by a 541,026 sf mixed-use complex located along the waterfront in the Financial District of San Francisco, CA. The previous largest tenant, AT&T, which occupied approximately 29% of the NRA, vacated at its August 2013 lease expiration. A new tenant, Salesforce.com, has leased the former AT&T space and additional square footage for a total of 43% of the NRA. The new tenant's rent is commencing in phases: in August 2014 17% of the NRA took occupancy; February 2015 an additional 11%; May 2015 an additional 14%; and May 2017 the remaining 1%. Salesforce.com's rent would be in the range of \$45 to \$46 psf, compared to AT&T's average rent of approximately \$37 psf prior to vacating.
The twelfth and fourteenth largest loans are One Warren Place and Two Warren Place; these two high-rise office buildings are part of an overall 52-acre office park located in Tulsa, OK. Although both properties continue to perform well, a notable amount of energy sector tenants were noted, some with near-term maturities. Fitch will continue to monitor these loans for any economic changes; however, neither are considered a Fitch Loan of Concern.
RATING SENSITIVITIES
All Outlooks on the classes remain Stable. Due to the recent issuance of the transaction and stable performance, Fitch does not foresee positive or negative ratings migration until a material economic or asset-level event changes the transaction's overall portfolio-level metrics. Additional information on rating sensitivity is available in the 'J.P Morgan Chase Commercial Mortgage Securities Trust 2011-C4' (May 17, 2011) report, available at www.fitchratings.com.
Fitch affirms the following classes as indicated:
--\$259.2 million class A-2 at 'AAAsf'; Outlook Stable;
--\$378.2 million class A-3 at 'AAAsf'; Outlook Stable;
--\$100 million class A-3FL at 'AAAsf'; Outlook Stable;
--\$226.8 million class A-4 at 'AAAsf'; Outlook Stable;
--\$62 million class A-SB at 'AAAsf'; Outlook Stable;
--\$1.18 billion* class X-A at 'AAAsf'; Outlook Stable.
*Notional amount and interest only.
The class A-1 certificates have paid in full. Fitch does not rate the class B, C, D, E, F, G, H, X-B and NR certificates.
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