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

DBRS Limited (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-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 stable performance of the transaction. As of the April 2015 remittance report, there has been collateral reduction of 56.5% since issuance as a result of scheduled loan amortization, successful loan repayment, realized losses from liquidated loans and principal recoveries from liquidated loans. There are currently 126 loans remaining in the transaction, as 58 loans have either refinanced or liquidated out of the pool since issuance. According to the most recent year-end reporting, the transaction has a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 1.44 times (x) and 10.7%, respectively. The largest 15 loans in the transaction, excluding defeasance collateral, report a WA DSCR and WA debt yield of 1.22x and 10.5%, respectively. In the next 12 months, 96 loans, representing 74.5% of the current pool balance, are scheduled to mature. Excluding specially serviced loans and defeasance collateral, these loans have a WA exit debt yield of 11.0%. The transaction benefits from defeasance collateral, as 17 loans, representing 18.0% of the current pool balance, are fully defeased.

As of the April 2015 remittance, there are four loans in special servicing and 31 loans on the servicer’s watchlist, representing 2.5% and 31.8% of the current pool balance, respectively. One loan in special servicing and two loans on the servicer’s watchlist are highlighted below.

The University Club loan (Pros ID#45, representing 0.9% of the current pool balance) is secured by a student-housing property in Kalamazoo, Michigan, near the Western Michigan University campus. The loan transferred to special servicing in August 2013 because of delinquency. The loan was previously modified and assumed in July 2010, which included principal forgiveness of $1.3 million, conversion to interest-only payments and a maturity extension by 40 months to January 2015. According to the servicer, foreclosure is expected to be completed in June 2015. According to the February 2015 rent roll, the property was 78.3% occupied with pre-leasing rates for the 2015-2016 academic year at 50%. The subject is currently managed by Ambling Management, which is expected to be retained by the lender post foreclosure. The property was last appraised in October 2013 at $11.3 million, a $6.2 million decrease from the issuance value of $17.5 million. DBRS expects the trust to experience a loss with the resolution of this loan.

The One World Trade Center loan (Pros ID #4, 7.1% of the current pool balance) is secured by a Class A, Energy Star-certified office tower in downtown Long Beach, California. The loan was initially added to the servicer’s watchlist for a declining occupancy rate and DSCR. Property performance has continued to deteriorate for several years, with the YE2014 DSCR reported at 0.33x compared with 0.63x at YE2013 and 0.75x at YE2012. The poor performance continues to be caused by a low occupancy rate, which was 59.8% as of the February 2015 rent roll compared with 67.8% as of March 2014 and 87.0% at issuance. The property was purchased and the loan assumed in 2007 by Legacy Partners, which purchased the property for $148.9 million ($259 per square foot (psf)), equating to a current loan to purchase price of 56.2%. Despite the property’s poor performance, the loan has remained current, though it has not reported a DSCR above 1.0x since YE2010. The loan matures in August 2015, presenting significant refinance risk; however, the loan benefits from a reasonable leverage point of $148 psf. As of April 30, 2015, Real Capital Analytics indicates that comparable properties within a ten-mile radius of the subject traded between $266 psf and $295 psf since June 2013. These sale prices are slightly above the price Legacy Partners paid for the subject in 2007 on a per square foot basis. DBRS will maintain communication with the servicer regarding the upcoming maturity of this loan.

The Highland Landmark Building is secured by an office property in Downers Grove, Illinois. The property was initially added to the servicer’s watchlist in late 2012 after RR Donnelley, which had occupied 57.0% of the NRA, vacated the subject after its lease expired. The borrower signed Advocate Health Care (Advocate) to a 15-year lease in April 2013 for the majority of the former RR Donnelley space (48.3% of total NRA); however, as a result of a period of large vacancy and rent abatements given to Advocate and one other new tenant, the YE2013 DSCR was -0.28x and the YE2014 DSCR was -0.07x. As all rental abatement periods ended in September 2014, DBRS expects that the performance will improve. According to the December 2014 rent roll, occupancy has further improved to 78.5%, with only two large vacancies remaining. The loan remains current and is scheduled to mature in August 2015.

DBRS maintains an investment-grade shadow rating on the Plastipak Portfolio loan, which represents 5.6% of the current pool balance. DBRS has today confirmed that the performance of the loan remains consistent with investment-grade loan characteristics.

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 the largest loans in the pool. The April 2015 monthly surveillance report for this transaction will be published shortly. If you are interested in receiving this report, contact DBRS at info@dbrs.com.

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

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

The applicable methodologies are North American CMBS Rating Methodology (March 2015) and North American CMBS Surveillance Methodology (January 2015), which can be found on our website under Methodologies.

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