Losses prompt Fitch to downgrade JPMorgan commercial securities
Fitch Ratings downgraded six classes of JPMorgan Chase commercial mortgage securities this week on losses from office and retail properties.
The ratings agency also affirmed 14 classes from the same JPMorgan Chase Series 2005 commercial mortgage pass-through deal.
Fitch said the loan pool incurred $48.5 million in realized losses and analysts have designated 33 loans, representing 22.4% of the pool, as loans of concern, including 11 specially serviced assets. The firm says a few classes will be "fully depleted" from losses on specially serviced assets.
The pool's aggregate principal balance has been cut by nearly 36% to $1.85 billion from $2.88 billion at issuance.
The loan causing the most losses is secured by a 243,000-square foot office property in Playa Vista, Calif. The property was 100% leased to a software company, but the tenant reduced its space by 55%. The loan is also past its anticipated repayment date of February 2010.
The second contributor to the major losses is a loan backed by a tenant office building in Washington, which is losing a major tenant and past its scheduled repayment date of February 2010, as well.
Another loan contributing to the expected losses is a 252,000-square foot retail center in Hamilton Township, N.J. The loan went to special servicing two years ago and a foreclosure action was launched in October 2010.
Fitch downgraded ratings on some of the classes to BBB- from BBB, while others moved further down the noninvestment scale to the CCC category from B.