Fitch Affirms JPMBB 2014-C23
KEY RATING DRIVERS
The affirmations are due to the overall stable performance of the underlying collateral pool. There have been no material changes to the pool since issuance.
Fitch modeled losses of 4.5% of the remaining pool; expected losses on the original pool balance total 4.4%. The pool has experienced no realized losses to date. Fitch has designated four loans (1.9%) as Fitch Loans of Concern, which includes two specially serviced assets (0.7%).
As of the August 2016 distribution date, the pool's aggregate principal balance has been reduced by 0.9% to $1.38 billion from $1.39 billion at issuance. No loans are defeased. Interest shortfalls are currently affecting class NR.
The largest loan in the pool, 17 State Street, (7.8% of the pool), is secured by a 564,893 square foot (sf) class A office building located in New York. The 42-story building was constructed in 1988 and is situated adjacent to Battery Park, on the southern tip of Manhattan's Financial District. The largest tenants include IP Soft Inc. (17%), expiry 2022, Fidessa Corporation (15%), expiry 2017; Alphadyne Asset Management LLC (5%), expiry 2026. The property is 97.3% occupied as of June 2016 with an average rent of $54.29 per square foot (psf). There is approximately 8% upcoming rollover in 2016 and 17% in 2017. Per Reis as of the second quarter (2Q) 2016, the downtown New York office market vacancy is 10.8% with average asking rent $53.38 psf. The most recent servicer-reported debt-service coverage ratio (DSCR) was 3.18x as of June 2016.
Two loans (0.7%) were transferred to special servicing in July 2016 due to payment default. The loans are not crossed but have a related borrower. The properties are both Microtel Inn & Suites consisting of 85 rooms each located in St. Clairsville, OH and Triadelphia, WV. Both properties are located within the Marcellus Shale Formation oil and gas market in West Virginia and Ohio areas. The special servicer is in the process of reviewing the file to determine the appropriate workout strategy.
The largest Fitch Loan of Concern (1.2%) is secured by two multifamily properties totaling 440 units located in Longview, TX and Tyler, TX. properties have a combined occupancy of 91.4% as of June 2016. The Longview property has suffered a decline in occupancy from 93% at issuance to 75% as of June 2016 and the Tyler property is 91% occupied as of June 2016. The portfolio's most recent DSCR, as of the (trailing 12 month) TTM June 2016, has declined to 1.26x from 1.64x at issuance. The decline in performance is due to higher vacancies and tenant concessions.
The Rating Outlook for all classes remains Stable. Fitch assumed conservative losses on the specially serviced assets as updated appraisal values are not yet available. Given the smaller size of these assets, losses are not expected to impact the rated classes. Due to the recent issuance of the transaction and stable performance, Fitch does not foresee positive or negative ratings migration until a material economic or asset-level event changes the transaction's portfolio-level metrics.
DUE DILIGENCE USAGE
No third-party due diligence was provided or reviewed in relation to this rating action
Fitch has affirmed the following ratings:
--$36.6 million class A-1 at 'AAAsf'; Outlook Stable;
--$241 million class A-2 at 'AAAsf'; Outlook Stable;
--$36.6 million class A-3 at 'AAAsf'; Outlook Stable;
--$235 million class A-4 at 'AAAsf'; Outlook Stable;
--$307.5 million class A-5 at 'AAAsf'; Outlook Stable;
--$79.3 million class A-SB at 'AAAsf'; Outlook Stable;
--$86.4 million class A-S* at 'AAAsf'; Outlook Stable;
--Interest-only class X-A at 'AAAsf'; Outlook Stable;
--$62.7 million class B* at 'AAsf'; Outlook Stable;
--$52.5 million class C* at 'Asf'; Outlook Stable;
--$201.6 million class EC* at 'Asf'; Outlook Stable;
--$96.6 million class D at 'BBB-sf'; Outlook Stable;
--Interest-only class X-B at 'BBB-sf'; Outlook Stable;
--$30.5 million class E at 'BBsf'; Outlook Stable;
--Interest-only class X-C at 'BBsf'; Outlook Stable;
--$15.3 million class F at 'Bsf'; Outlook Stable;
--Interest-only class X-D at 'Bsf'; Outlook Stable.
*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.
Fitch does not rate the $62.7 million class NR certificates or the interest-only class X-E. Fitch does not rate the $12.2 million class UH5, which will only receive distributions from, and will only incur losses with respect to, the non-pooled component of the U-Haul Self-Storage Portfolio mortgage loan. Fitch does not rate the $10.5 million class WYA, which will only receive distributions from, and will only incur losses with respect to, the non-pooled component of the Wyvernwood Apartments mortgage loan. Fitch does not rate the $15 million class RIM, which will only receive distributions from, and will only incur losses with respect to, the non-pooled component of the Residence Inn Midtown East mortgage loan. Such class will share in losses and shortfalls on the related componentized mortgage loan.