Fitch cuts 4 Classes of JPMCCM 2005

Global rating agency Fitch downgraded four classes and affirmed 16 classes of JP Morgan Chase Commercial Mortgage Securities Corp. Series 2005-LDP1 (JPMCC 2005-LDP1) commercial mortgage pass-through certificates due to an increase in Fitch expected losses on the pool.

Fitch modeled losses of 6.2% of the remaining pool; expected losses on the original pool balance total 5.5%, including losses already incurred. The pool has experienced $ 57.9 million ( 2% of the original pool balance) in realized losses to date. Fitch has designated 33 loans ( 17.1%) as Fitch Loans of Concern, which includes eight specially serviced assets ( 3.9%).

As of the February 2013 distribution date, the pool’s aggregate principal balance has been reduced by 43.6% to $1.62 billion from $2.88 billion at issuance. Per the servicer reporting, 15 loans ( 7.6% of the pool) are defeased. Interest shortfalls are currently affecting classes J through NR.

The largest contributor to expected losses is the specially- serviced Independence Plaza loan (1.2% of the pool), which is secured by a 252,000 sf retail shopping center located in Hamilton Township, NJ. The property lost its grocery anchor to bankruptcy in 2011. Further, T.J. Maxx vacated at its lease maturity in January 2013. The loan was transferred to special servicing in March 2010 due to missed debt service payments; a foreclosure action was commenced in October 2010 and is still ongoing.

The next largest contributor to expected losses is the Preston Center Pavilion & Square loan (2.5%), which is secured by a 233,000 sf retail center located in Dallas, TX. While the Dec. 31, 2012 rent roll reported occupancy of 95%; it was expected to drop to at least 74% in the first half of 2013 significantly impacting property cash flow.

As part of a lease renewal, the largest tenant is expected to downsize its space by 19,000 sf while the third largest tenant ( 31,000 sf) vacated its space at lease expiration in January 2013.