Fitch Affirms JPMCC 2011-C3

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed 11 classes of J.P. Morgan Chase Commercial Mortgage Securities Corp (JPMCC) commercial mortgage pass-through certificates series 2011-C3. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations are based on the stable performance of the underlying collateral since issuance. Per the servicer reporting, there is currently one loan that is both delinquent and in special servicing (1.6% of the pool) and no loans are defeased. Fitch reviewed the most recently available quarterly financial performance of the pool as well as updated rent rolls for the top 15 loans, which represent 82.5% of the transaction. Retail properties represent the largest pool concentration at 60.8%.

As of the January 2016 distribution date, the pool's aggregate principal balance has been reduced by 21.5% to $1.17 billion from $1.49 billion at issuance. Since the prior rating action, nine loans (7.9% of the original pool balance) have been repaid. The pool has experienced no realized losses to date. Four loans (21.7% of the pool) are considered Fitch Loans of Concern. Interest shortfalls are currently affecting the non-rated class NR.

The specially serviced loan (1.6% of the pool) is secured by two adjacent suburban office buildings totaling 548,159 square feet (sf) located in Houston, TX. The loan transferred to special servicing on Nov. 2, 2015 when the borrower's consultant provided a letter indicating property cash flow was less than the monthly debt service payments and the sponsor would no longer come out of pocket to cover shortfalls. Tenants have continued to vacate upon their lease expirations due to nearby road construction. Additionally, the market is under stress due to sustained low oil prices. Occupancy was reported at 49.4% as of September 2015 compared to 72% as of year-end (YE) 2014, following the early termination of Solar Turbine (24% of net rentable area [NRA]) in May 2015. The loan is actively cash managed. A draft appraisal has been received and the special servicer is currently reviewing a proposal for a discounted payoff (DPO). The loan is 60 days delinquent as of the January 2016 distribution date.

The largest Fitch Loan of Concern (10.6% of the pool) is secured by a three-building, 1.1 million sf office tower located in the CBD of Houston, TX. The servicer-reported debt service coverage ratio (DSCR) was 1.69x as of YE 2014 compared to 1.53x at YE 2013. As of the September 2015 rent roll, the property was 91.9% occupied. However, the largest tenant, Air Liquide (20.8% NRA) vacated upon their October 2015 lease expiration, bringing occupancy down to 71%. According to servicer watchlist commentary, the borrower has stated that they will begin a marketing campaign for the former Air Liquide space soon.

RATING SENSITIVITIES

The Rating Outlooks remain Stable for all classes due to stable performance of the pool and expected continued paydown of the classes. Fitch does not foresee positive or negative ratings migration until a material economic or asset level event changes the transaction's portfolio-level metrics.

DUE DILIGENCE USAGE

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

Fitch has affirmed the following classes:

--$79.9 million class A-2 at 'AAAsf'; Outlook Stable;

--$353.6 million class A-3 at 'AAAsf'; Outlook Stable;

--$485.4 million class A-4 at 'AAAsf'; Outlook Stable;

--$918.9 million class X-A* at 'AAAsf'; Outlook Stable;

--$41.1 million class B at 'AAsf'; Outlook Stable;

--$52.3 million class C at 'Asf'; Outlook Stable;

--$35.5 million class D at 'BBB+sf'; Outlook Stable;

--$41.1 million class E at 'BBB-sf'; Outlook Stable;

--$9.3 million class G at 'BBsf'; Outlook Stable;

--$16.8 million class H at 'Bsf'; Outlook Stable;

--$3.7 million class J at 'B-sf'; Outlook Stable.

*Notional amount and interest-only.

The class A-1 and A-3FL certificates have paid in full. Fitch does not rate the class F, X-B, and NR 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=998991

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=998991

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/20160203006574/en/

Fitch Ratings
Primary Analyst
Tiffany Pierce
Associate Director
+1-212-908-9107
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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