Fitch Affirms JPMCC 2005-LDP4

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed 13 classes of J.P. Morgan Chase Commercial Mortgage Securities Corp. (JPMCC) commercial mortgage pass-through certificates series 2005-LDP4. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations reflect Fitch's expected losses, as well as the pool concentration and adverse selection of the remaining pool. Fitch's expected losses totalled 27.9% of the remaining pool; expected losses on the original pool balance total 9.3%, including $224.2 million (8.4% of the original pool balance) in realized losses to date. As of the October 2016 distribution date, the pool's aggregate principal balance has been reduced 96% to $91.7 million from $2.7 billion at issuance. There are currently no defeased loans. Interest shortfalls are affecting class D, and L through NR.

Concentrated Pool with Adverse Selection: Although the transaction has experienced significant paydowns, the remaining pool is highly concentrated with only 13 of the original 184 loans remaining and the largest loan accounting for 30.5% of the pool balance. Current risk exposure of the remaining loans includes properties with high vacancies, low debt service coverage ratios (DSCRs), single-tenant properties, secondary market exposure, and loans previously modified debt including a Hope note.

High Percentage of Fitch Loans of Concern (FLOC) and Specially Serviced Loans: Six loans (46% of the pool) have been identified as FLOC, including two (26%) currently in special servicing. Both of the specially serviced assets are REO, both of which have high vacancies and are located in secondary markets. Severe losses are expected given the most recent servicer appraisal valuations.

The largest non-specially serviced FLOC is secured by a 484-unit student housing property in Kalamazoo, MI (13.3% of the pool), located across the street from the Western Michigan University campus. The loan had previously transferred to special servicing in August 2013 due to payment default, and a foreclosure sale was held in May 2015 where the noteholder was the successful bidder. During the six-month REO redemption period the loan was assumed by a new borrower and modified, whereby the loan was bifurcated into a senior ($10 million) and junior ($2.1 million) component. The loan assumption required a $100,000 paydown of the senior note to $9.9 million. The loan remains current under the modified terms, and transferred back to the master servicer in May 2016.

Property performance remains low with occupancy at 64% and DSCR at 0.54x as of June 2016. According to the servicer, the new borrower is focused on an aggressive capital improvements program and marketing campaign to drive occupancy to market levels. Although losses are not expected imminently, any recovery to the subject B-note is contingent upon full recovery to the A-note proceeds at the loan's maturity in December 2018. Unless collateral performance improves, recovery to the B-note component is unlikely.

The largest loan in the pool is secured by a 350,000 square foot (sf) suburban office building located in Holmdel, NJ 100% occupied by Vonage (30.5% of the pool). The loan had previously transferred to special servicing in July 2015 due to a downsizing request by the tenant after its August 2017 lease expiration, plus significant funds required for tenant improvements (TIs). The borrower was successful in negotiating a lease extension to October 2023 for the full space. The lease was modified to include placing the property under a hard lock box, establishing tax and insurance escrows, and a waterfall provision for all excess cash flow to fund a rollover reserve to be used for future TIs. The loan, which has remained current since issuance, transferred back to the master servicer in May 2016.

RATING SENSITIVITIES

The Rating Outlook on class B remains Stable due to sufficient credit enhancement. Although the credit enhancement will increase with scheduled amortization, Fitch is concerned with increasing pool concentration and high potential for performance volatility of the remaining collateral; therefore, a rating cap of 'BBsf' was considered appropriate on class B. Fitch does not foresee positive or negative rating migration unless there is material economic change to the remaining loans.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO RULE 17G-10

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

Fitch has affirmed the following classes:

--$34.8 million class B at 'BBsf'; Outlook Stable;

--$23.4 million class C at 'CCCsf'; RE 100%;

--$33.5 million class D at 'Dsf'; RE 20%;

--$0 class E at 'Dsf'; RE 0%;

--$0 class F at 'Dsf'; RE 0%;

--$0 class G at 'Dsf'; RE 0%;

--$0 class H at 'Dsf'; RE 0%;

--$0 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%.

The class A-1, A-1A, A-2, A-2FL, A-3A1, A-3A2, A-4, A-SB, A-M, and A-J 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

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 01 Sep 2016)

https://www.fitchratings.com/site/re/886006

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 16 Jun 2016)

https://www.fitchratings.com/site/re/882401

Global Structured Finance Rating Criteria (pub. 27 Jun 2016)

https://www.fitchratings.com/site/re/883130

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

https://www.fitchratings.com/site/re/873395

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1014552

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1014552

Endorsement Policy

https://www.fitchratings.com/regulatory

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTPS://WWW.FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT 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.

Copyright© 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch's factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch's ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed.

The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers.

For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

View source version on businesswire.com: http://www.businesswire.com/news/home/20161109006205/en/

Fitch Ratings
Primary Analyst
Benson Thomas
Director
+1-212-908-0645
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Britt Johnson
Senior Director
+1-312-606-2341
or
Media Relations
Hannah James, +1-646-582-4947
[email protected]

Source: Fitch Ratings

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Modular Medical Announces Commercial Availability of Pivot Tubeless Insulin Patch Pump Ahead of Commercial Expansion
• Federated Hermes launches active, short-duration fixed-income ETF
• Fort Technology Aims for Strategic Partnership with Logia USA to Fuel the Future of Data Centers