DBRS Morningstar Confirms Ratings on All Classes of J.P. Morgan Chase Commercial Mortgage Securities Trust 2022-ACB

DBRS Limited (DBRS Morningstar) confirmed its ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2022-ACB issued by J.P. Morgan Chase Commercial Mortgage Securities Trust 2022-ACB (JPMCC 2022-ACB) as follows:

-- Class A at AAA (sf)
-- Class B at AA (high) (sf)
-- Class C at AA (sf)
-- Class D at A (sf)
-- Class E at BBB (low) (sf)
-- Class F at BB (low) (sf)
-- Class G at B (low) (sf)

All trends are Stable.

The rating confirmations and Stable trends reflect the overall stable performance in the transaction’s first year since issuance, with the collateral property’s most recently reported occupancy rate and cash flows in line with DBRS Morningstar’s issuance expectations.

The loan is secured by the borrower's fee-simple interest in the American Copper Building, a luxury multifamily property in midtown Manhattan. The property is in the Murray Hill neighborhood overlooking the East River, close to the major transportation hub of Grand Central station and within walking distance of many large office buildings. The property offers extensive, superior amenities for tenants, including a rock-climbing wall, fitness center and studios, rooftop infinity pool, and spa facilities. The loan is sponsored by a joint venture between Black Spruce Management, which owns a portfolio of more than 40 properties across four boroughs in New York, and The Orbach Group, which focuses on affordable housing. Both sponsors own real estate portfolios exceeding $1.0 billion.

The $675 million subject transaction consists of a $611.4 million mortgage loan and $63.5 million of mezzanine debt, which is spread across two separate loans. The transaction is interest only throughout its fully extended five-year term, with an initial two-year term and three one-year extension options. The fully-extended maturity date is scheduled in March 2027.

The loan benefits from 421-a tax exemptions through June 2038, well past the fully-extended loan term. The abatement exempts the property from 100% of its taxes on improvements for the first 12 years, with the exemption percentage declining in 20% increments every other year until year 20, when the exemption expires. Given the tax exemption, the property is required to have designated affordable units and offers 160 affordable units, representing approximately 21.0% of the total unit count. The remaining 601 units are not subject to any rent restrictions. At issuance, the average monthly affordable rate for studio, one-bedroom, two-bedroom, and three-bedroom units was $854, $923, $1,111, and $1,302, respectively. The average monthly market rate for studio, one-bedroom, two-bedroom, and three-bedroom units was $4,027, $5,686, $9,125, and $12,336, respectively. The affordable units account for less than 5.0% of rental revenue.

According to the September 2022 rent roll, the building was 93.3% occupied, remaining in line with issuance. The two ground-floor retail tenants, Bright Horizons (a childcare provider) and Hole in the Wall (a restaurant) remain open. The annualized net cash flow (NCF) for the period ended September 30, 2022, was $34.8 million, and remains in line with the DBRS Morningstar-derived NCF of $34.2 million.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/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/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings.

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

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

The principal methodology is the North American CMBS Surveillance Methodology (October 3, 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].

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577