DBRS Confirms All Classes of J.P. Morgan Chase Commercial Mortgage Securities Trust 2018-WPT

DBRS Limited (DBRS) confirmed the ratings of the Commercial Mortgage Pass-Through Certificates, Series 2018-WPT issued by J.P. Morgan Chase Commercial Mortgage Securities Trust 2018-WPT as follows:

--Class A-FL at AAA (sf)
--Class A-FX at AAA (sf)
--Class XA-FX at AAA (Sf)
--Class B-FL at AA (low) (sf)
--Class B-FX at AA (low) (sf)
--Class C-FL at A (low) (sf)
--Class C-FX at A (low) (sf)
--Class X-FL at BBB (high) (sf)
--Class XB-FX at BBB (high) (sf)
--Class D-FL at BBB (sf)
--Class D-FX at BBB (sf)
--Class E-FL at BBB (low) (sf)
--Class E-FX at BBB (low) (sf)
--Class F-FL at BB (low) (sf)
--Class F-FX at BB (low) (sf)
--Class G-FL at B (low) (sf)
--Class G-FX at B (low) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance. The transaction closed in August 2018 with an original trust balance of $1.275 billion. This loan is secured by a portfolio of 147 commercial properties, comprising nearly 9.9 million square feet of office and flex space. Of the 147 properties, 88 assets are office (72.7% of the loan balance) and 59 (27.2% of the loan balance) are flex. The portfolio is located across four different states and five distinct metropolitan statistical areas, including Philadelphia (69 properties; 40.3% of the loan balance), Tampa (34 properties; 16.5% of the loan balance), Minneapolis (19 properties; 13.0% of the loan balance), Phoenix (14 properties; 12.9% of the loan balance) and Southern Florida (11 properties; 17.3% of the loan balance).
The underlying loan is interest only (IO) throughout the entire loan term and is split into two components: (1) a floating-rate component of approximately $255.0 million, structured with a two-year initial term and three one-year extension options, and (2) a five-year fixed-rate loan totaling $1.02 billion, comprising the $850.0 million trust balance and three companion loans totaling $170.0 million. The companion loans are secured across three other DBRS-rated deals, BMARK 2018-5, BMARK 2018-6 and BMARK 2018-7, as well as a fourth deal, BMARK 2018-8, which is not rated by DBRS. Loan proceeds of $1.28 billion were primarily used to refinance existing debt of $827.5 million and an existing credit line of $227.6 million. An upfront reserve of $32.9 million was established at closing, which included $13.3 million for an outstanding tenant improvement/leasing commission reserve, $11.8 million for an upfront tax reserve and a $3.5 million free rent reserve. The loan is sponsored by Workspace Property Trust, L.P., a private full-service commercial real estate company specializing in acquisition, development, management and the operation of office and flex properties.

As of the March 2019 rent rolls provided by the servicer, the portfolio reported an average occupancy rate of 87.7%, compared with 88.6% as of June 2018. There is moderate rollover in the near term, with 50 tenants across the portfolio expiring by year-end (YE) 2019, which accounts for 6.7% of the net rentable area (NRA). This is typical for flex property types and no near-term expiry exceeds 1.0% of the total portfolio NRA. The portfolio’s top five tenants represent a combined 13.4% of the NRA, and include United Healthcare Services, Inc (3.3% of the NRA), Aetna (3.3% of the NRA), Siemens (2.3% of the NRA), Express Scripts (2.1% of the NRA) and Kroll Ontrack (2.0% of the NRA). Siemens, the portfolio’s third-largest tenant, recently renewed leases through January 2023 at three properties, with a weighted average rental rate of $16.42, compared with the former rate of $16.17.

According to the YE2018 financials, the loan reported a net cash flow (NCF) figure of $103.5 million, generally in line with the DBRS Term NCF of $101.9 million, with reimbursements and base rents up slightly from the DBRS figures. At issuance, the portfolio was noted to be in generally good condition with no major deferred maintenance noted for the older vintage properties.

Classes XA-FX, X-FL and XB-FX are IO certificates that reference a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated applicable reference obligation tranche adjusted upward by one notch if senior in the waterfall.

All ratings are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed or discontinued by DBRS.

DBRS provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for this transaction.

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrs.com. The platform includes loan-level data for most outstanding CMBS transactions (including non-DBRS rated), as well as loan-level and transaction-level commentary for most DBRS-rated and -monitored transactions.

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

The principal methodology is North American CMBS Surveillance Methodology, which can be found on www.dbrs.com under Methodologies & Criteria. For a list of the structured-finance-related methodologies that may be used during the rating process, please see the DBRS Global Structured Finance Related Methodologies document, which can be found on www.dbrs.com in the Commentary tab under Regulatory Affairs. Please note that not every related methodology listed under a principal structured finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

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 under Related Documents or by contacting us at info@dbrs.com.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The DBRS long-term rating scale definition indicates that ratings of CCC or lower are assigned when the bond is highly likely to default, or default is imminent, thereby prevailing over a sensitivity analysis.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.

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