Fitch Downgrades JPMCC 2001-CIBC2; Outlook Negative
KEY RATING DRIVERS
The downgrades are due to the continued erosion in value of the pool's largest asset, the Collin Creek Mall (93% of the pool), and uncertainty about the timing of its ultimate disposition.
As of the December 2015 distribution date, the pool's aggregate principal balance has been reduced approximately 93.8% to $46.7 million from $961.7 million at issuance. Currently, there are only four assets remaining in the pool, two of which (4.1%) are defeased. Interest shortfalls are affecting classes E through NR with cumulative unpaid interest totaling $3.8 million.
The Collin Creek Mall is secured by the in-line space (332,055 square feet [sf]) of a 1.1 million sf regional mall in Plano, TX. The mall is anchored by Amazing Jake, Macy's, JC Penney, and Sears, all of which are under long-term leases. Dillards, a former anchor, vacated in January 2014 after its lease expired.
The loan transferred to the special servicer in November 2014 due to imminent default. The borrower negotiated a deed in lieu of foreclosure (DIL) and surrendered ownership to the Dillard's box and three undeveloped out-parcels as additional collateral. The DIL was closed in April 2015 and the property has been a real estate owned asset (REO) since.
The Collin Creek Mall is facing significant market competition from several newer shopping malls nearby. As a result, property performance has deteriorated with occupancy falling to 77% as of October 2015, compared to 84% at year-end (YE) 2014 and 94% at YE 2013. The occupancy at issuance was 98%. The property is facing significant near-term lease rollover risk. Leases representing 34.6% of the collateral space expire in 2016, and 10.7% expires in 2017.
The servicer reported year-to-date October 2015 debt service coverage ratio (DSCR) was 0.11x, compared to 0.67x at YE 2014 and 1.75x at underwriting. The special servicer is working to determine a disposition strategy.
RATING SENSITIVITIES
The Rating Outlook on class D remains Negative due to concerns about the final resolution and timing of the disposition of the Collin Creek Mall. If the value of the property continues to deteriorate, future downgrades on the class are possible. The distressed classes may be subject to further downgrades as losses are realized. If recoveries on the mall are better than anticipated some upgrades may be possible.
DUE DILIGENCE USAGE
No third-party due diligence was provided or reviewed in relation to this rating action.
Fitch has downgraded the following classes:
--$2.3 million class D to 'BBBsf' from 'Asf'; Outlook Negative;
--$28.9 million class E to 'Csf' from 'CCsf'; ; RE 35%;
--$12 million class F to 'Csf' from 'CCsf'; RE 0%;
Fitch has affirmed the following class:
--$16.8 million class G at 'Dsf'; RE0%.
Classes A-1 through C, as well as the interest only class X-2, have paid in full. Classes H, J, K, L and M have been depleted due to losses and are affirmed at 'Dsf/RE 0%'. Fitch does not rate NR class certificates. Fitch has previously withdrawn the rating on the Interest-only class X-1.
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