Morningstar DBRS Confirms Credit Ratings of JPMCC 2012-CIBX Mortgage Trust

DBRS, Inc. (Morningstar DBRS) confirmed its credit ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2012-CIBX issued by JPMCC 2012-CIBX Mortgage Trust:

-- Class E at C (sf)
-- Class F at C (sf)
-- Class G at C (sf)

Classes E, F, and G have credit ratings that do not carry a trend in commercial mortgage-backed securities (CMBS).

The credit rating confirmations reflect the minimal changes in Morningstar DBRS' expectations and the makeup of the remaining pool over the past year. Morningstar DBRS remains cautious on the disposition timeline and recoverability prospects for the remaining two loans in the pool: Jefferson Mall (Prospectus ID#4, 50.8% of the pool) and Southpark Mall (Prospectus ID#5, 49.2% of the pool). Both loans previously transferred to special servicing because of imminent nonmonetary default following the bankruptcy filing of their sponsor, CBL & Associates Properties, Inc. (CBL), in November 2020. After emerging from bankruptcy, the sponsor executed modifications in October 2022 to achieve full reinstatement of both loans while retaining CBL as the property manager and sponsor. Modification terms included an extension of the maturity dates to June 2026, as well as the execution of a hard lockbox requiring excess cash flow to go toward principal payments and a capital expenditure reserve. Per the November 2024 remittance, transaction reserves total $8.3 million, a decline from the $10.0 million in reserves at last review in November 2023.

Given the concentration and high exposure to previously defaulted loans, Morningstar DBRS' credit ratings are based on a recoverability analysis, which considers the most recent appraised values for the two underlying assets, their continued declining performance and potential for further value decline. Based on the most recent appraisals, future losses at disposition could be contained to Classes F, G, and the unrated Class NR; however, when subject to additional stress tests, Class E continues to remain exposed to possible losses at resolution, supporting the maintenance of the C (sf) credit ratings across all classes.

The Jefferson Mall loan is secured by 281,020 square feet (sf) of in-line space and one stand-alone restaurant parcel in a 956,992-sf super-regional mall in Louisville, Kentucky. The remaining noncollateral anchors are Dillard's, JCPenney, and Tilted 10. According to the July 2024 rent roll, the property was 93.5% occupied, compared with the 99.2% occupancy reported in June 2023. Collateral leases scheduled to roll through maturity total 52.5% of the net rentable area (NRA). Cash flow and the debt service coverage ratio (DSCR) have also declined over the past year. A February 2021 appraisal valued the property at $34.7 million, a 66% decline from the issuance appraised value of $101.7 million. Given the performance declines and high rollover during the remaining term, Morningstar DBRS further stressed this value for an expected loss severity of more than 50.0%.

The Southpark Mall loan is secured by the borrower's fee-simple interest in 397,596 sf of a larger 687,375-sf regional mall located in Colonial Heights, Virginia. The mall is anchored by Dick's Sporting Goods (collateral) and three noncollateral anchors. Although occupancy has been stable, rollover at the subject is notable, totaling 36.6% of the NRA prior to the loan's scheduled maturity in June 2026, including Dick's Sporting Goods (28.6% of NRA, lease expiry in November 2024). The YE2023 net cash flow was reported at $4.1 million, down from $5.8 million as of YE2022. The respective DSCR declined below breakeven. The February 2021 appraisal valued the property at $40.0 million, a 61% decline from the issuance appraised value of $103.0 million. Given the performance declines and concentrated rollover, Morningstar DBRS further stressed this value, resulting in a loss severity approaching 45.0%.

Morningstar DBRS' credit ratings on the applicable classes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transactions' respective press releases at issuance.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS   
There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.
 
A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024) https://dbrs.morningstar.com/research/437781.

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

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

The principal methodology is North American CMBS Surveillance Methodology (March 1, 2024) https://dbrs.morningstar.com/research/428798.

Other methodologies referenced in this transaction are listed at the end of this press release.

The credit rating was initiated at the request of the rated entity.

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

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

Morningstar DBRS notes that a sensitivity analysis was not performed for this review as the transaction is in wind-down, with only two loans remaining. In such cases, Morningstar DBRS credit ratings are typically based on a recoverability analysis.

DBRS, Inc.
22 West Washington Street
Chicago, IL 60602 USA
Tel. +1 312 332-3429

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

-- North American CMBS Multi-Borrower Rating Methodology (March 1, 2024),
https://dbrs.morningstar.com/research/428797
-- Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (September 19, 2024),
https://dbrs.morningstar.com/research/439702
-- North American Commercial Mortgage Servicer Rankings (August 23, 2024),
https://dbrs.morningstar.com/research/438283
-- Legal Criteria for U.S. Structured Finance (October 28, 2024),
https://dbrs.morningstar.com/research/441840

For more information on this credit or on this industry, visit https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.