Fitch Downgrades JP Morgan Chase Commercial Mtge Securities Trust 2010-C1

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has downgraded five and affirmed six classes of JP Morgan Chase Commercial Mortgage Securities Trust commercial mortgage pass through certificates, series 2010-C1. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The downgrades are largely the result of anticipated losses in connection with the recent loan modification of Gateway at Salt Lake City, the largest loan in the pool (30.6%). The Gateway at Salt Lake City, a 623,972 square foot (sf) retail center in downtown Salt Lake City, has underperformed expectations since issuance. Direct competition from the newer City Creek Center retail property has led to declining occupancy and lower foot traffic at the subject property.

As of the March 2016 distribution date, the pool's certificate balance has paid down 57% to $308 million from $716.3 million at issuance. The pool has become highly concentrated with only 13 of the original 36 loans remaining. Two loans are considered Fitch loans of concern (34.5%); the remainder of the collateral is amortizing balloon loans which currently have a Fitch stressed weighted average loan to value (LTV) of 48.5%.

The Gateway at Salt Lake City loan transferred to the special servicer in August 2015 for imminent default following several years of declining performance. The servicer recently negotiated a loan assumption and write-down of debt; the new sponsor is Vestar, an operator of retail and entertainment destinations in the Western U.S. The servicer is finalizing the details of the assumption, and the April remittance will likely reflect terms of the modification, including the write-down of debt.

The Gateway at Salt Lake City has suffered a steady decline in occupancy since 2012 when City Creek opened. Currently, the property is approximately 75% occupied, compared to 78.8% at year-end (YE) 2014 and 96.4% at issuance. The servicer reported annualized third quarter 2015 (3Q2015) debt service coverage ratio (DSCR) was 0.71x compared to 0.82x at YE2014 and 1.59x at UW. The new sponsor intends to reposition the property with a focus on entertainment tenants, and according to the servicer, performance may temporarily drop further as the mall transitions from its current tenant base to one that fits Vestar's business strategy.

Additionally, Fitch has concerns with the near-term maturity of the Aquia Office Building loan (3.9%), which has experienced high vacancy in recent years. The loan, which is secured by a 97,990 sf office property in Stafford, VA, was previously in special servicing and modified with a one-year maturity extension from June 2015 to June 2016. Fitch has concerns over the loan's ability to refinance due to performance remaining below expectations. As of YE2015, the property was 65% occupied. Although occupancy remains low, this is an improvement from 31.4% at YE2014 after the former largest tenant vacated upon lease expiration in December 2014. Servicer reported DSCR as of YE2015 was 0.62x, compared to 1.68x at YE2014 and 1.46x at UW.

RATING SENSITIVITIES

The Negative Rating Outlook on class C represents the uncertainty surrounding the future performance of the Gateway at Salt Lake City. Additional downgrades are possible if the modified loan fails to stabilize. The Rating Outlooks for classes A1 through B remain Stable as the majority of remaining loans exhibit low leverage and stable performance.

Fitch has downgraded the following classes as indicated:

--$16.1 million class B to 'Asf' from 'AAsf'; Outlook to Stable from Negative;

--$26.9 million class C to 'BBB-sf' from 'A-sf'; Outlook Negative.

--$14.3 million class D to 'CCCsfsf' from 'BBsf'; RE50%

--$16.1 million class E to 'Csf' from 'Bsf'; RE0%;

--$9 million class F to 'Csf' from 'CCCsf'; RE0%.

Fitch has affirmed the following classes and revised Outlooks as indicated:

--$11.8 million class A-1 at 'AAAsf'; Outlook Stable;

--$131.3 million class A-2 at 'AAAsf'; Outlook Stable;

--$61.5 million class A-3 at 'AAAsf'; Outlook Stable;

--Interest-only class X-A at 'AAAsf'; Outlook Stable;

--$7.2 million class G at 'Csf'; RE 0%;

--$6.3 million class H at 'Csf'; RE 0%.

Fitch does not rate classes NR and X-B.

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=1001780

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1001780

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/20160331005992/en/

Fitch Ratings, Inc.
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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