OREANDA-NEWS. S&P Global Ratings today raised its ratings on two classes and lowered its ratings on two other classes of commercial mortgage pass-through certificates from J. P. Morgan Chase Commercial Mortgage Securities Trust 2011-C3, a U. S. commercial mortgage-backed securities (CMBS) transaction. In addition, we affirmed our ratings on eight other classes from the same transaction (see list).

Our rating actions on the principal - and interest-paying certificates follow our analysis of the transaction, primarily using our criteria for rating U. S. and Canadian CMBS transactions, which included a review of the credit characteristics and performance of the remaining loans in the pool, the transaction's structure, and the liquidity available to the trust.

We raised our ratings on classes B and C to reflect our expectation of the available credit enhancement for these classes, which we believe is greater than our most recent estimate of necessary credit enhancement for the respective rating levels. The upgrades also follow our views regarding the collateral's current and future performance and available liquidity support. The upgrades also reflect the reduction in trust balance.

We lowered our ratings on classes H and J to reflect credit support erosion that we anticipate will occur upon the eventual resolution of the loan with the special servicer, as well as the recent performance decline at two properties securing two of the top 10 loans ($110.2 million, 10.0%).

The affirmations on the principal - and interest-paying certificates reflect our expectation that the available credit enhancement for these classes will be within our estimate of the necessary credit enhancement required for the current ratings. The affirmations also reflect our views regarding the collateral's current and future performance, the transaction structure, and liquidity support available to the classes.

We affirmed our 'AAA (sf)' rating on the class X-A interest-only (IO) certificates based on our criteria for rating IO securities, in which the rating on the IO securities would not be higher than the lowest-rated reference class. The notional balance on class X-A references the aggregate principal balance of classes A-1, A-2, A-3, and A-4.


As of the July 15, 2016, trustee remittance report, the collateral pool balance was $1.1 billion, which is 73.5% of the pool balance at issuance. The pool currently includes 29 loans, down from 45 loans at issuance. One of theseloans ($19.1 million, 1.7%) is with the special servicer, one ($10.3 million, 0.9%) is defeased, and three ($233.1 million, 21.2%) are on the master servicer's watchlist. The master servicer, Midland Loan Services, reported financial information for 100% of the nondefeased loans in the pool, of which 95.1% was year-end 2015 data, 1.3% was partial year 2016 data, and the remaining was year-end 2014 data.

We calculated a 1.53x S&P Global Ratings weighted average debt service coverage (DSC) and 67.2% loan-to-value (LTV) ratio using a 7.56% S&P Global Ratings weighted average capitalization rate. The DSC, LTV, and capitalizationrate calculations exclude the specially serviced and defeased loans. The top 10 nondefeased loans have an aggregate outstanding pool trust balance of $860.0 million (78.3%). Using servicer-reported numbers, we calculated an S&P Global Ratings weighted average DSC and LTV of 1.50x and 68.2%, respectively, for the top 10 nondefeased performing loans.

To date, the transaction has not experienced any principal losses. We expect losses of approximately 0.3% of the original pool trust balance in the near term, based on losses we expect upon the eventual resolution of the specially serviced loan.


As of the July 15, 2016, trustee remittance report, one loan in the pool was with the special servicer, Midland Loan Services. Detail of the specially serviced loan is as follows:

The 13101-13105 Northwest Freeway loan ($19.1 million, 1.7%) is the sole loan with the special servicer and has a total reported exposure of $19.2 million. The loan is secured by a 382,726-sq. ft. office property in Houston. The loan was transferred to the special servicer on Nov. 2, 2015, due to imminent default. The borrower indicated that the property will not be able to generatesufficient cash flow to pay the debt service amount. Midland and the borrower are negotiating a forbearance agreement, including a potential short sale. If the forbearance terms are not met, then a foreclosure sale will be scheduled. The reported DSC and occupancy as of year-end 2015 were 0.43x and 40.7%, respectively. We expect a minimal loss, which is less than 25% of the loan balance, upon the loan's eventual resolution.

In addition to the specially serviced loan, our analysis considered the recentdecline in performance at the properties securing two of the top 10 loans. TheSangertown Square loan and the 1400 K Street loan represent the fifth - and seventh-largest loans in the transaction, respectively. Both loans appear on the master servicer's watchlist due to low reported DSCs. The Sangertown Square loan reported a DSC of 0.83x as of year-end 2015, while the 1400 K Street loan reported a DSC of 0.93x as of year-end 2015.