Morningstar DBRS Changes Trends on All Classes of J.P. Morgan Chase Commercial Mortgage Securities Trust 2018-WPT to Negative, Confirms All Credit Ratings

DBRS Limited (Morningstar DBRS) confirmed its credit ratings on all classes of 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 (low) (sf)
-- Class XB-FX at BBB (low) (sf)
-- Class D-FL at BB (high) (sf)
-- Class D-FX at BB (high) (sf)
-- Class E-FL at B (high) (sf)
-- Class E-FX at B (high) (sf)
-- Class F-FL at CCC (sf)
-- Class F-FX at CCC (sf)
-- Class G-FL at CCC (sf)
-- Class G-FX at CCC (sf)

Morningstar DBRS changed the trends on all classes to Negative from Stable to reflect the decline in performance since Morningstar DBRS' last review and the elevated refinance risk for the loan following its transfer back to special servicing in November 2024, ahead of its maturity date in July 2025. Classes F-FX, G-FX, F-FL, and G-FL do not have a trend as these classes have credit ratings that do not typically carry a trend in commercial mortgage-backed securities (CMBS) credit ratings.

The loan is secured by the fee and leasehold interests in a portfolio of 147 properties, consisting of nearly 9.9 million square feet of office and flex space with a whole loan balance of $1.23 billion as of the March 2025 reporting, reflecting a 4.5% whole loan reduction since issuance. Three properties, which previously represented approximately 1.0% of the total allocated loan amount have been released from the portfolio. Property releases are permitted upon the following provisions: a prepayment of 115.0% of the original allocated loan amount and a remaining portfolio loan-to-value ratio (LTV) equal to or less than the issuance LTV or the LTV prior to the release.

The mortgage loan is split into a floating-rate component with an original balance of $255.0 million and a 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 Morningstar DBRS-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 Morningstar DBRS. Following a loan modification in July 2023, the loan's maturity was extended to July 2025 with no extension options remaining.

As a condition to the modification, the borrower paid down the loan by $25.0 million, contributed $15.0 million to tenant improvement/ leasing commission and replacement reserves, and purchased a 24-month interest rate cap. Additionally, excess cash flow, after reserve deposits are made, is now being applied to pay down the loan up to a cap of $10.0 million. As noted above, the loan was transferred back to special servicing in November 2024 because of imminent nonmonetary default resulting from reported shortfalls in the cash management account. With the loan's maturity approaching in July 2025 and the continued performance decline reported through the first half of 2024, Morningstar DBRS anticipates a second loan modification will be necessary.

According to the trailing six months ended June 30, 2024, financials, the portfolio reported an annualized net cash flow (NCF) of $82.3 million (reflecting a debt service coverage ratio (DSCR) of 1.10 times (x)), representing a 17.7% decline from the YE2023 NCF of $100.0 million (a DSCR of 1.32x) and an 8.4% decline from the Morningstar DBRS NCF of $89.8 million derived at the last review. Occupancy declined to 75.9% as of June 2024, down from 78.6% at YE2023 and 89.0% at issuance. Despite the relatively stable occupancy rate, cash flow declined predominantly because of decreased base rent and expense reimbursements. Morningstar DBRS has inquired about the reason for the revenue decline but suspects it may be related to dark tenants or rental abatements granted in 2024.

Morningstar DBRS' previous credit rating action in April 2024 included an update to the portfolio's valuation. For more information regarding the approach and analysis conducted, please refer to the press release titled "Morningstar DBRS Takes Rating Actions on North American Single-Asset/Single-Borrower Transactions Backed by Office Properties," published on April 15, 2024. For purposes of this credit rating action, Morningstar DBRS maintained the valuation approach from the April 2024 review, which was based on a capitalization rate of 9.50% applied to the Morningstar DBRS NCF of $89.8 million. Morningstar DBRS also maintained negative qualitative adjustments to the LTV sizing benchmarks totaling -2.0% to reflect the portfolio's older average construction age and the properties' generally suburban locations. The Morningstar DBRS concluded value of $945.6 million represents a variance of -42.1% from the issuance appraised value of $1.63 billion and implies a whole loan LTV of 128.8%.

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 credit 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 at (August 13, 2024), https://dbrs.morningstar.com/research/437781.

Classes X-FL, XA-FX, and XB-FX are interest-only (IO) certificates that reference a single rated tranche or multiple rated tranches. The IO credit 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 (February 28, 2025), https://dbrs.morningstar.com/research/448963.

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.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS' outlooks and credit ratings are monitored.

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

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 (February 28, 2025), https://dbrs.morningstar.com/research/448962
-- 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
-- Interest Rate Stresses for U.S. Structured Finance Transactions (February 26, 2024), https://dbrs.morningstar.com/research/428623
-- Legal Criteria for U.S. Structured Finance (December 3, 2024),
https://dbrs.morningstar.com/research/444064

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.