Fitch Affirms JPMCC 2005-LDP2
KEY RATING DRIVERS
The affirmations reflect the pool's high concentration of specially serviced assets (48.4%) and continued paydown (4.9% of the pool is fully amortizing). Since Fitch's last rating action, significant paydown resulted in the full repayment of classes A1-A through A-MFL. Fitch modeled losses of 23.9% of the remaining pool; expected losses on the original pool balance total 7.3%, including \$137.8 million (4.6% of the original pool balance) in realized losses to date. Fitch has designated eight (18.6%) Fitch Loans of Concern including the 16 specially serviced assets.
As of the June 2015 distribution date, the pool's aggregate principal balance has been reduced by 88.9% to \$330.5 million from \$2.98 billion at issuance. Per the servicer reporting, one loan (0.4% of the pool) is defeased. Interest shortfalls are currently affecting classes H through NR.
The largest contributor to expected losses is a Real Estate Owned (REO) 236,961 sf office plaza (7.5% of the pool) located in Piscataway, NJ. The asset became REO in May 2014. As of year-end (YE) 2014, the servicer-reported occupancy and debt service coverage ratio (DSCR) were 58% and 0.80x, respectively. The majority of tenant leases expire in 2017.
The next largest contributor to expected losses (8.8% of the pool) is secured by two office properties (187,799 sf) located in Reston, VA. The loan previously transferred to the special servicer in January 2013 due to imminent default as each property lost its sole tenant in 2010 and 2012. The loan has since been modified in December 2014 and was returned to the master servicer in February 2015. The loan modification extended the maturity date to December 2015 from April 2015 and bi-furcated the loan into a \$20.5 million A and \$8.5 million B note. The properties remain vacant. Fitch will continue to monitor to loan as both properties are still vacant.
The third largest contributor to expected losses is a specially serviced asset secured by a 204,674 sf office property (9.7% of the pool) located in Atlanta, GA. The loan transferred to special servicing in March 2011 for imminent default. The property became REO in June 2012. An immediate disposition is not expected, as the special servicer continues to focus on leasing up the property.
RATING SENSITIVITIES
Rating Outlooks on classes A-J through C remain Stable due to continued paydown. Upgrades are not likely due to the high number of Fitch Loans of Concern. The Negative Outlooks on classes D and E reflect significant pool concentration of special serviced assets and uncertainty regarding their resolutions. 41.1% of the 44% of the pool is scheduled to mature in 2015 and is in specially servicing primarily due to maturity defaults, with no immediate near term resolutions. Classes could be downgraded if expected losses increase.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch has affirmed the following classes:
--\$100.6 million class A-J at 'Asf'; Outlook Stable;
--\$18.6 million class B at 'Asf'; Outlook Stable;
--\$41 million class C at 'BBB-sf'; Outlook Stable;
--\$26.1 million class D at 'BBsf'; Outlook Negative;
--\$26.1 million class E at 'Bsf'; Outlook Negative;
--\$29.8 million class F at 'CCsf'; RE 0%;
--\$26.1 million class G at 'CCsf'; RE 0%;
--\$44.7 million class H at 'Csf'; RE 0%;
--\$17.5 million 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 O at 'Dsf'; RE 0%;
--\$0 class P at 'Dsf'; RE 0%;
--\$0 class Q at 'Dsf'; RE 0%.
Fitch does not rate the class NR certificates. Fitch previously withdrew the ratings on the interest-only class X-1 and X-2 certificates.
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