Fitch Affirms JPMCC 2004-C3

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed JP Morgan Chase Commercial Mortgage Securities Corp. (JPMCC) commercial mortgage pass-through certificates series 2004-C3. A full list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The affirmations of the remaining distressed classes are based on the continued risks given the high concentration of specially serviced loans and overall concentration with only seven non-specially serviced loans remaining.

Fitch modeled losses of 38.7% of the remaining pool; expected losses on the original pool balance total 5.5%, including $65.1 million (4.3% of the original pool balance) in realized losses to date. Fitch has designated two loans (50.5%) as Fitch Loans of Concern, which are currently specially serviced.

As of the February 2016 distribution date, the pool's aggregate principal balance has been reduced by 96.8% to $49.3 million from $1.52 billion at issuance. Per the servicer reporting, two loans (8.6% of the pool) are defeased. Interest shortfalls are currently affecting classes J through NR.

The largest contributor to expected losses is the specially-serviced Cambridge Court Phase I & II loan (36.8% of the pool), which is the largest loan in the transaction. The loan is secured by a 277,517 square foot (sf) medical office property consisting of two buildings, located in Auburn Hills, MI. The loan transferred to specially servicing in August 2014 due to monetary default. The largest tenants include Plante & Moran LLP (20%), expiry Oct. 31, 2020; Ascension Health (9%), expiry March 31, 2016; McLaren Health Care Corporation (4%), expiry June 30, 2022; Strategic Manufacturing (5%), expiry Dec. 31, 2016; and RICOH (3%), expiry Jan. 31, 2017. The special servicer is currently working on a 30,290 sf lease renewal/expansion with Ascension Health, and a 5,145 sf lease prospect. The buildings, combined are 60% leased as of January 2016. The special servicer is working to improve occupancy before marketing it for sale.

The next largest contributor to expected losses is the specially-serviced South Hadley Shopping Center loan (13.7%), which is the third largest loan in the transaction. The loan secured by a 91,648 sf retail property located in South Hadley, MA. The loan was transferred to special servicing in November 2014 for imminent maturity default. At issuance, the largest tenants were Big Y Foods (66%), lease exp Nov. 31, 2015; and Rocky's Hardware (10%), exp March 10, 2018. Big Y Foods (66%) vacated in August 2013 and continued paying rent until their lease expired on Nov. 30, 2015. Per the special servicer, the asset will be included in the March 2016 auction without a listing price. They have ordered an updated appraisal but it has not yet been received. The property is 26% occupied as of January 2016 with average rent $12.89 sf.

The second largest loan in the transaction is the T-Mobile - Lenexa KS loan (17.6%), which is secured by a 77,484 sf single-tenant retail property located in Lenexa, KS. The property is 100% occupied by Voicestream PCS II whose lease expires October 31, 2019 before the loans anticipated repayment date (ARD) of December 1, 2019. The final maturity date is in December 2034.

RATING SENSITIVITIES

Although the credit enhancement to class G has improved, future upgrades are not expected due to the high concentration of specially serviced loans (over 50% of the pool), increased deal concentration, and adverse selection. Additionally, there is limited scheduled principal paydown which may result in the remaining classes being outstanding for some time. Losses remain possible.

DUE DILIGENCE USAGE

No third-party due diligence was provided or reviewed in relation to this rating action.

Fitch has affirmed and revised Recovery Estimates for the following ratings:

--$18.3 million class G at 'CCCsf'; RE 100%;

--$15.2 million class H at 'CCCsf'; RE 80%.

--$15.8 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 P at 'Dsf'; RE 0%;

--$0 class Q at 'Dsf'; RE 0%.

The class A-1, A-1A, A-2, A-3, A-4, A-5, A-J, B, C, D, E and F certificates have paid in full. Fitch does not rate the class NR certificates. Fitch previously withdrew the ratings on the interest-only class X-1 and X-2 certificates.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1000683

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1000683

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160309006328/en/

Fitch Ratings
Primary Analyst
Lisa Cook
Director
+1-212-908-0665
Fitch Ratings Inc.
33 Whitehall St.
New York, NY 10004
or
Committee Chairperson
Britt Johnson
Senior Director
+1-312-606-2341
or
Media Relations
Sandro Scenga, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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