Fitch Affirms JPMBB 2014-C19
KEY RATING DRIVERS
The affirmations are based off of the overall stable performance of the pool's underlying collateral since issuance and increased credit enhancement (CE) due to continued amortization. As of the March 2016 distribution date, the pool's aggregate balance has been reduced by 1.2% to \\$1.66 billion from \\$1.68 billion at issuance.
Fitch modeled losses of 4.4% of the remaining pool; expected losses on the original pool balance total 3.6%. The pool has experienced no realized losses to date. Fitch has designated one loan (0.7%) as a Fitch Loan of Concern. The pool contains no defeased or specially serviced loans and there have been no interest shortfalls to date.
The Fitch Loan of Concern is secured by a 147 room full-service hotel located in Williston, ND. The hotel is within the Bakken shale region, which is an area that has been severely affected by low oil prices. During a recent tour of the region to assess market conditions, Fitch visited the property and confirmed the low demand for lodging in the area. Performance at the hotel has declined sharply since issuance. Per servicer reporting, the net operating income (NOI) debt service coverage ratio (DSCR) dropped to 0.14x as of year-end (YE) 2015 from 1.36x as of YE 2014. Occupancy for the year fell to 46% in 2015 from 67% in 2014. While the loan remains current, the drop in the NOI DSCR has triggered the lockbox provision and the property is currently being cash managed. Fitch will continue to monitor the loan for further deterioration in performance. Given the decline in performance and market conditions, Fitch modeled a significant loss on the loan.
The largest loan in the pool is the Outlets at Orange loan (9%), which is secured by a 787,697 square foot (sf) open air outlet mall located in Orange, CA. The mall is anchored by Saks Fifth Avenue Off 5th, Last Call by Neiman Marcus, and Nordstrom Rack. Per servicer reporting, the NOI DSCR increased to 2.82x as of YE 2015 from 2.75x as of YE 2014. Occupancy at the property was 99% as of the December 2015 rent roll.
The second largest loan in the pool is the NSP Multifamily Portfolio loan (8.5%), which is secured by a portfolio of four multifamily properties. The portfolio, totalling 1,382 units, is located throughout several markets including Coraopolis, PA, Cranberry Township, PA, Florence, KY and Lexington, KY. As of December 2015, portfolio-wide occupancy was down to 83% from 88% as of YE 2014. The NOI DSCR dropped slightly to 1.46x as of YE 2015 from 1.87x as of YE 2014.
The Rating Outlooks on classes A-1 through E remain Stable as credit enhancement is high due to continued amortization and downgrades are not expected. Rating Upgrades are not likely until the pool has experienced more significant paydown. Class F has been assigned a Negative Rating Outlook due to an increase in expected losses stemming from the Fitch Loan of Concern. A downgrade to the Rating for class F is possible if more loans in the pool become distressed or if losses on the Fitch Loan of Concern are recognized.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch affirms the following classes and revises Rating Outlooks as indicated:
--\\$46.9 million class A-1 at 'AAAsf'; Outlook Stable;
--\\$468.7 million class A-2 at 'AAAsf'; Outlook Stable;
--\\$112.4 million class A-3 at 'AAAsf'; Outlook Stable;
--\\$276.3 million class A-4 at 'AAAsf'; Outlook Stable;
--\\$62.1 million class A-SB at 'AAAsf'; Outlook Stable;
--\\$1.1* billion class X-A at 'AAAsf'; Outlook Stable;
--\\$98.7 million class A-S at 'AAAsf'; Outlook Stable;
--\\$89.9 million class B at 'AA-sf'; Outlook Stable;
--\\$89.9* million class X-B at 'AA-sf'; Outlook Stable;
--\\$63.4 million class C at 'A-sf'; Outlook Stable;
--\\$252 class EC at 'A-sf'; Outlook Stable;
--\\$65.2 million class D at 'BBB-sf'; Outlook Stable;
--\\$31.7 million class E at 'BBsf'; Outlook Stable;
--\\$17.6 million class F at 'Bsf'; Outlook to Negative from Stable.
*Notional and interest-only.
Fitch does not rate the class NR, CSQ and the interest-only X-C certificates. Class A-S, B, and C certificates may be exchanged for a related amount of class EC certificates, and class EC certificates may be exchanged for class A-S, B, and C certificates.