Fitch Downgrades 1 Class of JPMCC 2006-LDP9

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has downgraded one class and affirmed 27 classes of JP Morgan Chase Commercial Mortgage Securities Corp. commercial mortgage pass-through certificates series 2006-LDP9 (JPMCC 2006-LDP). A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The downgrade reflects realized losses to the class D-S stemming from the payoff of the Belnord loan, which was reflected in the April 2015 remittance. The affirmations reflect the continued performance in-line with Fitch's expectations at the last rating action. Fitch modeled losses of 19.3% of the remaining pool; expected losses on the original pool balance total 17.5%, including $264.6 million (5.4% of the original pool balance) in realized losses to date. Fitch has designated 54 loans (47.3%) as Fitch Loans of Concern, which includes 16 specially serviced assets (21.5%).

As of the April 2015 distribution date, the pool's aggregate principal balance has been reduced by 37.3% to $3.07 billion from $4.89 billion at issuance. Per the servicer reporting, 17 loans (6% of the pool) are defeased. Interest shortfalls are currently affecting classes A-J through NR.

The largest contributor to expected losses is the Americold Portfolio loan (6.3% of the pool), which is secured by a portfolio of four cold storage warehouse/distribution facilities totaling 3.3 million square feet (sf) located across four states (MO, TX, KS, and MS). As of the April 2015 rent roll, the overall portfolio occupancy was 62.5% compared to 90.5% at issuance. Year-end (YE) 2014 DSCR, on a NOI basis, was 0.89x compared to 1.85x at issuance. The loan has been reporting a low occupancy and low DSCR since 2010 due to the West Point, Mississippi property ceasing physical operations in 2010 as a result of minimal occupancy and in an effort to reduce operating expenses. The sponsor continues to cover debt service shortfalls out of pocket.

The next largest contributor to expected losses is the Galleria Towers loan (7.6%), which is secured by three office properties totaling 1.43 million sf located in Dallas, TX adjacent to the Galleria Dallas shopping mall. The servicer reports that the largest tenant, FedEx Kinko's (14.2% of NRA), will be vacating at the end of their lease in November 2015 for a new headquarters in West Plano, TX. The servicer also reports that the sponsor is having discussions with a tenant to replace a portion of the vacated space. Internet retailer Amazon signed a lease in 2014. Once build-out is completed, they will occupy roughly 88,000 sf. Occupancy at the property has ranged between the 74% reported at YE 2014 and 89% at YE 2011. The debt service coverage ratio (DSCR) was reported to be 1.22x at YE 2014, which is in-line with the 1.21x reported at YE 2013.

The third largest contributor to expected losses is the specially-serviced Bank of America Plaza (3.3%), which is secured by a 1.25 million sf class A trophy office building located in Atlanta, GA. The loan was transferred to special servicing in February 2011 for imminent default due to cash flow issues. Bank of America downsized its space at the property during 2011 to lower rental rates. The asset became REO in February 2012. The occupancy is currently 46% per the March 2015 rent roll. The servicer is currently pursuing a comprehensive stabilization strategy for the asset. A renovation of the fitness center was completed in late October 2014 and lobby renovations are currently in process. The servicer will continue to pursue a stabilization strategy for the asset as it continues to attract various interests from small to large prospects.

RATING SENSITIVITIES

Rating Outlooks on classes A-3 through A-1A remain Stable due to sufficient credit enhancement and expected continued paydown. Upgrades are possible once the specially serviced loans are resolved. The distressed classes (rated below 'Bsf') may be subject to further rating actions as losses are realized.

Fitch downgrades the following classes as indicated:

--$16.5 million class D-S to 'Dsf' from 'Csf'; RE 0%.

Fitch affirms the following classes and revises REs as indicated:

--$364 million class A-M at 'CCCsf'; RE 100%;

--$121.4 million class A-MS at 'CCCsf'; RE 100%.

Fitch affirms the following classes as indicated:

--$1.6 billion class A-3 at 'Asf'; Outlook Stable;

--$49.4 million class A-3SFL at 'Asf'; Outlook Stable;

--$4.4 million class A-3SFX at 'Asf'; Outlook Stable;

--$289.3 million class A-1A at 'Asf'; Outlook Stable;

--$318.5 million class A-J at 'CCsf'; RE 0%;

--$106.3 million class A-JS at 'CCsf'; RE 0%;

--$72.8 million class B at 'Csf'; RE 0%;

--$24.3 million class B-S at 'Csf'; RE 0%;

--$22.8 million class C at 'Csf'; RE 0%;

--$7.6 million class C-S at 'Csf'; RE 0%;

--$49.5 million class D at 'Csf'; RE 0%;

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

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

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

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

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

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

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

--$0 class H-S 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-1S, A-2, A-2S, A-2SFL and A-2SFX certificates have paid in full. Fitch does not rate the class NR certificates. Fitch previously withdrew the rating on the interest-only class X certificates.

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 10, 2014 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at 'www.fitchratings.com' under the following headers:

Structured Finance >> CMBS >> Criteria Reports

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (March 31, 2015);

--Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (May 28, 2014);

--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 10, 2014).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

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

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748781

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=984208

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.

Fitch Ratings
Primary Analyst
Daniel Anderson, +1-312-606-2305
Associate Director
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Committee Chairperson
R. Brook Sutherland, +1-312-606-2346
Senior Director
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
[email protected]

Source: Fitch Ratings

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