DBRS Morningstar Confirms All Ratings on J.P. Morgan Chase Commercial Mortgage Securities Trust 2018-WPT

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

-- 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 and Stable trends reflect the overall stable performance of the transaction since DBRS Morningstar’s last review. The collateral loan is secured by the fee and leasehold interests in a portfolio of 147 properties, consisting of nearly 9.9 million square feet (sf) of office and flex space with a loan balance of $1.1 billion as of the May 2022 reporting, reflecting a 0.3% collateral reduction since issuance. Built between 1972 and 2013, the portfolio includes 88 office properties (6.5 million sf) and 59 flex buildings (3.4 million sf). Located across four states, Pennsylvania, Florida, Minnesota, and Arizona, the collateral encompasses five distinct metropolitan statistical areas (MSAs) and more than 15 submarkets. The largest concentration of properties is in the Philadelphia MSA, with 69 properties totalling 40.3% of the allocated loan balance (ALB) at issuance, followed by the Tampa MSA (34 properties; 16.5% of the ALB), the Minneapolis MSA (19 properties; 13.0% of the ALB), the Phoenix MSA (14 properties; 12.9% of the ALB), and the Southern Florida MSA (11 properties; 17.3% of the ALB). These properties are generally in dense suburban markets that benefit from favourable accessibility and close proximity to their respective central business districts.

Property releases are permitted upon the following provisions: (1) a prepayment of 115% of the original allocated loan amount (ALA) and (2) a remaining portfolio loan-to-value ratio (LTV) equal to or less than the issuance LTV or the LTV prior to the release. Specific to the 155 Great Valley Parkway asset, there is a tenant with a purchase option at a price that is greater than the release price of 110% of the ALA. According to the servicer, the 300-309 Lakeside Drive property was released on June 19, 2020.

The mortgage loan is split into (1) a floating-rate component of approximately $255.0 million, with a two-year initial term and three one-year extension options and (2) a five-year fixed-rate loan totalling $1.02 billion, comprising the $850.0 million trust balance and three companion loans totalling $170.0 million. The companion loans are secured across three other DBRS Morningstar-rated transactions, including BMARK 2018-B5, BMARK 2018-B6, and BMARK 2018-B7, as well as a fourth deal, BMARK 2018-B8, which was not rated by DBRS Morningstar. The DBRS Morningstar rated companion notes are shadow-rated investment grade and are within the top 10 loans in the BMARK 2018-B7 and BMARK 2018-B5 transaction; DBRS Morningstar confirmed all ratings with Stable trends during the most recent review of BMARK 2018-B5 in January 2022. In July 2020, the sponsor submitted an unscheduled principal payment (curtailment) of nearly $3.0 million, which partially paid down the most senior bond in the transaction, Class A-FL.

According to the May 2022 reporting, the loan has been removed from the servicer’s watchlist upon receiving a maturity extension to July 2023. As of YE2021, the portfolio reported a physical occupancy rate of 84.1%, a slight decline from the 88.6% occupancy rate reported at issuance. The portfolio benefits from a granular rent roll with more than 500 tenants, and none of them occupy more than 4.2% of the total net rentable area (NRA). Per the December 2021 rent roll, tenants occupying approximately 16.9% of the total portfolio NRA are scheduled to rollover prior to maturity in July 2023. The most recent financials reported a YE2021 revenue figure of $190 million with a consolidated debt service coverage ratio (DSCR) of 1.57 times (x), compared with the YE2020 figures of $189 million and 1.64x, respectively. The slight decline in performance year-over-year was the increase in real estate taxes and repair and maintenance expenses.

ENVIRONMENTAL, SOCIAL, and GOVERNANCE (ESG) CONSIDERATIONS
There were no environmental, social, or governance factors that had a significant or relevant effect on the credit analysis.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/396929.

Classes XA-FX, X-FL, and XB-FX are interest-only (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 Morningstar.

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

The DBRS Viewpoint platform provides additional information on this transaction and underlying loans including DBRS Morningstar metrics, commentary, servicer-reported cash flows, and other performance-related data. For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com.

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

The principal methodology is the North American CMBS Surveillance Methodology (March 4, 2022), which can be found on dbrsmorningstar.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 Morningstar Global Structured Finance Related Methodologies document, which can be found on dbrsmorningstar.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 DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482.

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 [email protected].

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar 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.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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