DBRS Confirms All Classes of J.P. Morgan Chase Commercial Mortgage Securities Trust 2012-C8

DBRS Limited (DBRS) has today confirmed the ratings on the following classes of J.P. Morgan Chase Commercial Mortgage Securities Trust 2012-C8:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-SB at AAA (sf)
--Class A-S at AAA (sf)
--Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (sf)
-- Class EC at A (sf)
-- Class D at BBB (high) (sf)
-- Class E at BBB (low) (sf)
-- Class F at BB (sf)
-- Class G at B (sf)

Class EC is exchangeable with Class A-S, Class B and Class C (and vice versa). All trends are Stable. DBRS does not rate the first loss piece, Class NR.

The rating confirmations reflect the stable performance of the transaction since issuance. The collateral consists of 43 fixed-rate loans secured by 84 commercial properties. As of the June 2015 remittance report, the pool has a balance of approximately $1.08 billion, representing a collateral reduction of 5.0% since issuance. Overall, the loans in the pool have reported stable performance, as according to YE2014 reporting, the pool had a weighted-average debt service coverage ratio (DSCR) and weighted-average debt yield of 1.6 times (x) and 10.1%, respectively.

As of the June 2015 remittance report, there are three loans on the servicer’s watchlist, representing 8.3% of the pool balance. There are no delinquent or special serviced loans.

National Industrial Portfolio (Prospectus ID#2, 6.3% of the pool) is secured by a seven-property industrial portfolio located across Connecticut and Massachusetts, built between 1958 and 1999. The loan is on the watchlist because Coca Cola (9.6% of the NRA) did not exercise its lease extension option. Its lease expires in December 2015; however, Coca Cola has expressed interest in renewing its lease and is currently in negotiations with the borrower. Staples Office Superstore (18.2% of the NRA), which occupies 100.0% of one building, has renewed its lease expiring May 2015, to October 2021. As of the June 2015 remittance, there are $474,000 and $615,000 in tenant and leasing reserves, respectively. According to the March 2015 rent roll, the portfolio was 99.8% occupied and reported a DSCR of 1.42x. The subject portfolio benefits from a strong tenant roster that includes five investment-grade tenants that comprise approximately 70.0% of the portfolio NRA. Three of those tenants (The Home Depot, Advance Auto Parts and Kraft), representing 43.1% of the NRA, are on long-term leases that extend beyond the five-year loan term.

Challenger South (Prospectus ID#24, 1.4% of the pool) is secured by a 14-tenant industrial office center located in Orlando, Florida. The loan is on the watchlist for reporting a DSCR of 0.85x as of YE2014. A decline in base rent and expense reimbursements were the primary major cause of the cash flow decline. The occupancy rate decreased from 86.5% at YE2013 to 58.7% at YE2014 as a result of Carley Corporation’s (23.4% of the NRA) vacating upon its lease expiration on March 31, 2014. Since the December 2014 rent roll, Advanced Charging Technologies has signed a lease for 4.3% of the NRA, bringing the most recent occupancy rate up to 63.0%. According to the servicer, there are eight tenants, representing approximately 90,000 square feet, who are in the process of signing leases. Most of the potential tenants have toured the space and are waiting for the proposal or draft lease. According to REIS, the submarket vacancy rates average 17.6%, which may explain why the property was unable to quickly rebound from the departure of Carley Corporation.

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 and loans on the servicer’s watchlist. The June 2015 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.

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 (June 2015) and CMBS North American Surveillance (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.