DBRS Confirms Ratings of J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP4

DBRS has today confirmed the ratings of J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP4 as follows:

-- Class A-1A at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class A-M at AAA (sf)
-- Class A-J at BBB (low) (sf)
-- Class B at B (sf)
-- Class C at CCC (sf)
-- Class X-1 at AAA (sf)

All trends are Stable except for Class C, which does not carry a trend.

The rating confirmations reflect the losses associated with loans formerly in special servicing, which have been liquidated that were consistent with DBRS expectations. DBRS had previously projected losses up to, and including, Class D. In the past year, six loans have been liquidated from the pool, resulting in total realized losses of $144.49 million. The Silver City Galleria loan, which was formerly secured by a shopping mall in Taunton, Massachusetts, and was liquidated in July 2014, accounted for the largest portion of trust loss, totaling $108.25 million – a loss severity of 91.2%.

As of the June 2014 remittance report, there has been collateral reduction of approximately 50.0% since issuance, with 43 loans having paid out of the pool at maturity or liquidated from the trust. There are currently 141 loans remaining in the transaction. The transaction benefits from defeasance collateral as ten loans, representing 14.2% of the current pool balance, are fully defeased. There are currently four loans in special servicing and 32 loans on the servicer’s watchlist, representing 1.5% and 21.6% of the current pool balance, respectively. According to YE2013 reporting, the largest 15 loans in the transaction, excluding defeasance, reported a weighted-average debt service coverage ratio (DSCR) and weighted-average debt yield of 1.12 times (x) and 9.6%, respectively. Both figures are skewed negatively by the One World Trade Center and Highland Landmark Building loans, which are on the servicer’s watchlist and are discussed below.

The One World Trade Center loan is secured by a Class A office tower in downtown Long Beach, California. The loan has been on the servicer’s watchlist for several years due to a low DSCR, which was reported at 0.63x at YE2013. The poor performance continues to be caused by a low occupancy rate, which was 67.8% as of the March 2014 rent roll. In comparison, the submarket availability rate according to CoStar is 15%. The largest tenant at the property is the Federal Bureau of Investigation, which occupies 19.4% of the net rentable area (NRA) through September 2023. Despite the property’s extended poor performance, the loan remains current and benefits from a reasonable leverage point of $150 psf. The property and loan were assumed in 2007 by Legacy Partners, which has a commercial real estate portfolio totaling over 13 million square feet throughout the western United States.

The Highland Landmark Building is secured by an office property in Downers Grove, Illinois, a western suburb of Chicago. The property was added to the servicer’s watchlist in late 2012 after RR Donnelley, which had occupied 57% of the NRA, vacated the subject after its lease expired. The borrower was ultimately able to sign Advocate Health Care (Advocate) to a 15-year lease in April 2013 for the majority of the former RR Donnelley space (48.3% of the total NRA); however, due to a period of large vacancy and rent abatements given to Advocate, the YE2013 DSCR was -0.28x. According to the April 2014 rent roll, the property was 70.5% occupied with the rent abatement period ending for Advocate in May 2014. Another tenant also recently signed a ten-year lease that is subject to a rent abatement period ending in September 2014. The loan remains current and is scheduled to mature in August 2015.

DBRS shadow-rates one loan in the transaction, representing 5.3% of the current pool balance, as investment grade. DBRS has today confirmed that the performance of this loan remains consistent with investment-grade loan characteristics.

As part of its review, DBRS analyzed the top 15 loans, specially serviced loans, loans on the servicer’s watchlist and the shadow-rated loan, which comprise approximately 60.8% of the current pool balance.

DBRS continues to monitor this transaction in its Monthly CMBS Surveillance Report, with additional information on the DBRS viewpoint for this transaction, including details on select loans within the transaction. The June 2014 Monthly CMBS Surveillance Report for this transaction will be published shortly. If you are interested in receiving this report, contact us at info@dbrs.com.

Notes:
All figures are in U.S. dollars unless otherwise noted.

This rating is endorsed for use by DBRS Limited for use in the European Union.

The applicable methodologies are CMBS Rating Methodology (January 2012) and CMBS North American Surveillance Methodology (November 2012), which can be found on our website under Methodologies.