Fitch Affirms JPMCC 2011-PLSD; Outlooks Remain Negative on 2 Classes

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed all classes of J.P. Morgan Chase Commercial Mortgage Securities Trust 2011-PLSD and the Rating Outlooks remain Negative on classes D and X-B. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations are the result of the overall stable collateral performance since Fitch's last rating action. Per March 2015 rent roll, the property was 93% leased, compared to 95% at June 2014. At issuance the property was 91.6% leased and 90% occupied. The servicer reported year-end (YE) 2014 debt service coverage ratio (DSCR) was 1.87x, compared to 1.67x at YE2013 and 1.85x at issuance.

The loan is secured by 1.94 million square feet (sf) of the 2.26 million sf Palisades Center, a super-regional mall located in West Nyack, NY. The collateral anchors include JC Penney, Burlington Coat Factory, Dick's Sporting Goods, BJ's Wholesale Club, Target, and Home Depot. The shadow anchors, Macy's and Lord & Taylor, own their own spaces and are not part of the collateral. The in-line tenancy consists of over 200 diverse retail and entertainment tenants.

The tenants mix has shifted since issuance as large national chain stores moved out after their lease expirations. This is partially due to the opening of Shops at Nanuet in October 2013, a 750,000 sf redevelopment that is located approximately five miles away from the subject. A number of former tenants, including Apple Store and Banana Republic, vacated the subject upon lease expiration and moved to the new location. Several tenants also with a presence at the Shops at Nanuet have upcoming lease expirations at the Palisades Center, including Gap, Ann Taylor, Loft, and White House and Black Market.

Since last review, Sports Authority (occupied 2% of the property) has closed at its Jan. 31, 2015 lease expiration. IMAX is anticipated to vacate in the near future. A new tenant has signed a 10-year lease to take over the majority of the IMAX's space. Based on March 2015 rent roll, leases representing 2.1% of the property are scheduled to expire in 2015, 6.9% in 2016 and 2.1% in 2017.

As of YE2014, total mall sales have decreased 7.7% to $596.1 million from $645.7 million at YE2013. Total mall sales at issuance were $643.7 million. Although sales per square foot (psf) for in-line tenants improved slightly to $439 at YE2014 from $433 psf, it is still significantly lower than $529 psf at issuance.

As part of its review, Fitch analyzed the performance of the loan and its underlying collateral. Fitch modeled cash flow based on the YE 2014 OSAR and 1Q'15 rent roll. The real estate tax expense was based on actual 2014 tax bill. Fitch stressed the cash flow by excluding revenue from month-to-month leases and several tenants with lease rollover in 2015 and 2016.

The Fitch stressed DSCR for the loan is 1.40x, same as modeled at issuance which was based on trailing 12 month (TTM) Sept. 30, 2011 financials. The Fitch stressed loan-to-value ratio is 65.4%, which is based on capitalization of the Fitch-adjusted net cash flow at a rate of 8%, compared to 63.3% at issuance.

The certificates are collateralized by a five-year fixed rate (5.658%) loan that is amortizing on a 30-year schedule. As of May 2015 remittance report, the current balance of the loan is $357.6 million, reduced 4.5% from $374.6 million at issuance. The loan matures in November 2016. In addition, there is a $150 million mezzanine debt held outside the trust.

RATING SENSITIVITIES

Ratings on classes A1, A2, X-A, B and C are expected to remain stable. The Negative Outlooks on classes D and X-B indicate that future downgrades are possible should the property performance deteriorate. In 2014, the property benefitted from a large real estate tax reduction after a reassessment. In the event the property is assessed to a higher value in the future, property cash flow could be affected. Fitch will monitor this transaction closely.

DUE DILIGENCE USAGE

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

Fitch has affirmed the following ratings:

--$8.4 million class A-1 at 'AAAsf'; Outlook Stable;

--$242.9 million class A-2 at 'AAAsf'; Outlook Stable;

--IO class X-A at 'AAAsf'; Outlook Stable;

--IO class X-B at 'BBBsf'; Outlook Negative;

--$33.2 million class B at 'AAsf'; Outlook Stable;

--$35.5 million class C at 'Asf'; Outlook Stable;

--$37.6 million class D at 'BBBsf'; Outlook Negative.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions [862818 - 20-MAR-2015] (pub. 20 Mar 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=862818

Global Structured Finance Rating Criteria (pub. 31 Mar 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864268

Additional Disclosures

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=985578

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/20150529005814/en/

Fitch Ratings
Primary Analyst
Amy Gan
Director
+1-212-908-9143
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, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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