Morningstar DBRS Confirms Credit Ratings on All Classes of J.P. Morgan Chase Commercial Mortgage Securities Trust 2012-WLDN

DBRS Limited (Morningstar DBRS) confirmed the credit ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2012-WLDN issued by J.P. Morgan Chase Commercial Mortgage Securities Trust 2012-WLDN as follows:

-- Class X-A at BB (sf)
-- Class A at BB (low) (sf)
-- Class B at B (low) (sf)
-- Class C at CCC (sf)

All trends are Stable, with the exception of Class C, which has a credit rating that does not typically carry a trend in commercial mortgage-backed securities (CMBS) credit ratings. The credit rating confirmations reflect the overall stable performance of the underlying collateral since the last rating action in March 2024, as evidenced by the year-over-year growth in occupancy and in-line sales.

The fixed-rate loan is secured by the fee-simple interest in the Walden Galleria, a 1.3 million-square-foot (sf) super-regional shopping mall in Cheektowaga, New York. The subject is the primary shopping destination in the Buffalo metropolitan area and is approximately 12 miles from the Canadian border. The mall is currently anchored by JCPenney (collateral) and Macy's (noncollateral), and major tenants include Dick's Sporting Goods (on a ground lease), Regal Cinemas, Dave & Buster's, and Zara, among others. The anchor space that was formerly occupied by Sears (noncollateral) through 2018 has been backfilled by Primark and Dick's Sporting Warehouse Sale Store (DSWSS), while the former Lord & Taylor space (noncollateral) remains dark since its closure in 2020. Although Lord & Taylor's space was set to be used as a co-working office center, its entire space is currently available as dividable retail space. The loan sponsor is The Pyramid Companies, the largest privately held shopping mall developer in the Northeastern U.S.; its affiliate, Pyramid Management Group, LLC, provides management services.

The loan was originally structured with a 10-year term and transferred to special servicing for a second time in February 2022 for imminent maturity default. However, the loan returned to the master servicer in September 2022 following a modification, which extended the maturity to November 2024 with an additional six-month extension option, conditional upon the loan balance being the lessor of $225.0 million or 80.0% of its appraised value. Although the property has not been reappraised since 2022, the loan reported a current balance of $222.0 million as of February 2025, representing a collateral reduction of 17.5% since issuance, and the maturity has been extended to May 2025. Other notable terms include the conversion of the loan to interest-only (IO), and a cash trap that will remain in effect until the loan is paid in full. Since Morningstar DBRS' last credit action, the borrower has kept the loan current and has made monthly principal curtailments, with the loan continuing to perform in accordance with the modification terms.

The subject property's occupancy continues to increase. According to the June 2024 rent roll, the entire mall was 90.4% occupied, an improvement from 88.0% as of YE2023. Per a December 2024 article from The Business Journals, several vacant units were backfilled with new and returning tenants, including Barnes & Noble, Abercrombie & Fitch, and Express Jewelers, in the second half of 2024, which may further increase the occupancy. According to the June 2024 rent roll, tenants representing approximately 18.4% of the net rentable area (NRA) had lease expirations through the next 12 months. Fifteen of these tenants (8.8% of the NRA) have surpassed their respective lease expirations to date, including major in-line tenants Forever 21 (2.4% of the NRA; expiration in January 2025) and DSWSS (1.6% of the NRA; expiration in September 2024). However, according to the mall's online directory, most of these tenants, including both Forever 21 and DSWSS, remain in occupancy, suggesting that lease extensions were executed. Given the recent leasing activity and stable sales, Morningstar DBRS believes the majority of the remaining tenants with upcoming expiries will renew and/or extend their leases, including anchor Best Buy (3.4% of the NRA; expiration in January 2025), which has been at the property since 2006.

According to the Q4 2024 sales report provided by the servicer, the tenants' (excluding Apple) annualized in-line sales were approximately $619 per sf (psf), a notable increase from the YE2023 and issuance figure of $510 psf and $580 psf, respectively. Despite the improvement in occupancy and sales, the property's net cash flow (NCF) did not reflect a similar growth because of continued declines in base rents, with the trailing 12-month ended September 30, 2024, NCF reported at $23.1 million, slightly below the Morningstar DBRS NCF of $23.8 million assumed at last review. In comparison, the YE2023 and YE2022 NCF were $23.8 million and $25.2 million, respectively.

For this review, Morningstar DBRS' credit ratings are based on the value analysis from the previous credit rating action, which considered the August 2022 appraised value of $219.0 million and the annualized trailing nine-month NCF of $23.8 million for the September 30, 2023, period, resulting in an implied cap rate of 10.9%. Based on the appraised value, the loan-to-value ratio (LTV) is 101.7% on current loan balance. Additionally, Morningstar DBRS maintained a positive qualitative adjustment to the final LTV sizing benchmarks, totaling 0.25% to reflect the property's dominant position in the market and the lack of local competition.

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 factors 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/morningstar-dbrs-criteria-approach-to-environmental-social-and-governance-factors-in-credit-ratings).
 
Class X-A is an interest-only (IO) certificate that references 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 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 (December 13, 2024; https://dbrs.morningstar.com/research/444617/north-american-cmbs-surveillance-methodology).

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

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@morningstar.com.

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

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The Morningstar DBRS Long-Term Obligation Rating Scale definition indicates that credit 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.

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

-- North American Single-Asset/Single-Borrower Ratings Methodology (December 13, 2024; https://dbrs.morningstar.com/research/444612/north-american-single-assetsingle-borrower-ratings-methodology)

-- Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (September 19, 2024; https://dbrs.morningstar.com/research/439702/morningstar-dbrs-north-american-commercial-real-estate-property-analysis-criteria)

-- Legal Criteria for U.S. Structured Finance (December 3, 2024; https://dbrs.morningstar.com/research/444064/legal-criteria-for-us-structured-finance)

-- North American Commercial Mortgage Servicer Rankings (August 23, 2024; https://dbrs.morningstar.com/research/438283/north-american-commercial-mortgage-servicer-rankings)

A description of how Morningstar DBRS analyzes structured finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/417279.

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