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Global Credit Research - 04 Aug 2010
Approximately $852 Million of Structured Securities Affected
New York, August 04, 2010 -- Moody's Investors Service (Moody's) affirmed the ratings of seven pooled
classes and downgraded five pooled classes and one non-pooled or
rake class of JP Morgan Chase Commercial Mortgage Securities Corp.,
Commercial Mortgage Pass-Through Certificates, Series 2006-FL1.
The downgrades reflect worse than expected performance, outstanding
interest shortfalls and the pending maturity of five loans over the course
of next six months in a challenged refinancing market. These negative
factors are partially offset by pay downs from the amortization of four
loans (61% of the trust balance). The Holyoke Mall,
Crossgate Mall, Independence Mall and Champlain Mall loans feature
amortization schedules of between 20 and 30 years. The rating action
is a result of Moody's on-going surveillance of commercial mortgage
backed securities (CMBS) transactions.
As of the July 15, 2010 distribution date, the transaction's
aggregate certificate balance has decreased by approximately 3%
to $852 million from $874 million at last review.
The certificates are collateralized by nine loans ranging in size from
less than 1% to 29% of the trust balance. Principal
is currently paid to the certificate holders on a modified pro rata basis.
The pool has a heavy concentrated of regional malls with a common sponsor,
Robert J. Congel (71% of trust balance). The trust
has not realized any losses since securitization. Currently,
two loans (7% of the trust balance) are in special servicing including
one that will be returned to master servicer (6% of trust balance)
as of August 2010. Outstanding interest shortfalls total $46,652.
The Holyoke Mall Loan ($243 million including a rake bond totaling
$45 million - 29% of the trust balance) is secured
by a 1.4 million square foot (MSF) regional mall located in Holyoke,
MS. Class HM1 is a rake class secured solely by the $45
million trust junior component of this loan. This loan amortizes
on a 25-year schedule and its current maturity date is February
9, 2011. The borrower has two additional 12-month
extension options. Mall shop occupancy was 95% as of March
2010 and 2009 in-line sales were $458 per square foot (PSF).
Although the top revenue line has been stable over the last few years,
expense items appear to be increasing at a faster pace negatively impacting
the bottom line. The property's net operating income (NOI)
for 2009 was approximately $24 million down from 2008 NOI of $28
million. Moody's 2010 review NOI is $23 million.
The loan's sponsors are Robert J. Congel and Woodchuck Hill
Associates. Moody's current underlying rating is Ba1.
The Crossgate Mall Loan ($183 million - 22% of the
trust balance) is secured by a 1.2 MSF regional mall located in
Albany, NY. This loan amortizes on a 30-year schedule
and its current maturity date is June 9, 2011. The borrower
has one additional 12-month extension option remaining.
One anchor pad space (143,676 SF) is dark. Mall shop occupancy
was 76% as of March 2010 and 2009 in-line sales were $446
PSF. The property's net operating income (NOI) for 2009 was
approximately $26 million down slightly from 2008 NOI of $27
million. Moody's 2010 review NOI is $24 million.
The loan's sponsors are Robert J. Congel and Madeira Associates.
Moody's current underlying rating is Baa3.
The DRA Portfolio Loan ($165 million -- 21% of the
the trust balance) is secured by 27 office buildings located in Atlanta,
GA, Houston, TX and Orlando, FL. The Class A-B
properties, which were built or renovated between 1971 and 2000,
contain 2.8 MSF of net rentable area. There is additional
debt in the form of a $110 million non-trust junior component
and a $36 million mezzanine loan. The portfolio's
occupancy was 84% as of year-end 2009 and the NOI for 2009
was approximately $26 million down from 2008 NOI of $30
million. The loan sponsors are DRA Advisors, LLC and Colonial
Properties Trust. The loan is interest-only during the loan
term and final maturity date is October 9, 2010. There are
no more extension options available. Moody's current underlying
rating is B2.
In addition to the DRA Portfolio Loan, there are three loans that
have final maturity dates within the next six months; all are current.
They are the Orchard Supply Hardware (8% of trust balance),
Salmon Run Mall (6% of trust balance that will be returned to master
servicer as of August 2010) and Brookhollow Central (3% of trust
balance) loans. We anticipate that some of these loans will be
transferred to special servicing in the near future.
The Centerpoint loan ($6 million - 1% of the trust
balance) was transferred to special servicing on January 29, 2010
due to imminent default. The final maturity date is August 7,
2010. The combined $130.5 million loan was divided
into two pari passu notes consisting of fixed rate A-1 note with
an original balance of $117.45 million (securitized in JPMC
2006-CIBC14 transaction) and a floating rate A-2 note with
an original principal balance of $13.05 million.
The A-2 note was included in this transaction. This loan
was originally secured by 16 industrial properties in the Chicago metropolitan
statistical area (MSA). Since then, two properties were released
and their proceeds were used to pay down the A-2 note per the loan
documents. The current principal balance for the A-2 note
is $6,065,000 and the combined outstanding principal
balance for the total loan is $123,515,000.
The sponsor for this loan is CenterPoint Properties Trust and JF US Industrial
Trust. The portfolio's NOI has been relatively stable since
securitization, and based on the updated appraised value ($148.45
million) the trust is not expected to incur principal losses at this time.
Midland Loan Services, Inc, is the special servicer for this
Moody's loan to value (LTV) ratio for the pooled trust balance is
79% compared to 70% at last review. Moody's
stressed debt service coverage (DSCR) ratio for the pooled trust balance
is 1.28X compared to 1.47X at last review. Although
these two credit metrics have deteriorated since our last review,
we believe the senior classes warrant an affirmation due to their low
loan exposure per square foot and continued deleveraging from amortization.
Moody's rating action is as follows:
-Class A1B, $318,739,169, affirmed
at Aaa (sf); previously on March 22, 2006 assigned Aaa (sf)
-Class A-2, $279,894,000,
affirmed at Aaa (sf); previously on March 22, 2006 assigned
-Class B, $40,552,699, affirmed
at Aaa (sf); previously on November 14, 2007 upgraded to Aaa
(sf) from Aa1 (sf)
-Class C, $34,431,374, affirmed
at Aa2 (sf); previously on March 11, 2009 downgraded Aa2 (sf)
from Aa1 (sf)
-Class D, $19,894,505, affirmed
at Aa3 (sf); previously on March 11, 2009 downgraded to Aa3
(sf) from Aa2 (sf)
-Class E, $19,128,453, affirmed
at A2 (sf); previously on March 11, 2009 downgraded to A2 (sf)
from A1 (sf)
-Class F, $15,302,920, affirmed
at A3 (sf); previously on March 11, 2009 downgraded to A3 (sf)
from A2 (sf)
-Class G, $16,068,184, downgraded
to Baa2 (sf) from Baa1 (sf); previously on March 11, 2009 downgraded
to Baa1 (sf) from A3 (sf)
-Class H, $19,128,453, downgraded
to Baa3 (sf) from Baa2 (sf); previously on March 11, 2009 downgraded
to Baa2 (sf) from Baa1 (sf)
-Class J, $16,068,184, downgraded
to Ba3 (sf) from Baa3 (sf); previously on March 11, 2009 downgraded
to Baa3 (sf) from Baa2 (sf)
-Class K, $18,363,189, downgraded
to B3 (sf) from Ba1 (sf); previously on March 11, 2009 downgraded
to Ba1 (sf) from Baa3 (sf)
-Class L, $9,182,553, downgraded
to Caa2 (sf) from Ba2 (sf); previously on March 11, 2009 downgraded
to Ba2 (sf) from Ba1 (sf)
-Class HM1, $44,871,909, downgraded
to B2 (sf) from Ba2 (sf); previously on March 11, 2009 downgraded
to Ba2 (sf) from Baa3 (sf)
Moody's monitors transactions on a monthly basis through two sets of quantitative
tools -- MOST® (Moody's Surveillance Trends) and CMM
(Commercial Mortgage Metrics) on Trepp -- and on a periodic
basis through a comprehensive review. Moody's prior review is summarized
in a Press Release dated March 11, 2009. The previous review
was part of Moody's first quarter 2009 ratings sweep and incorporated
assumptions for capitalization rates and stressed cash flows that were
outlined in "Rating Methodology Update: US CMBS Conduit and Fusion
Review Prompted by Declining Property Values and Rising Delinquencies"
dated February 5, 2009.
The principal methodology used in rating and monitoring this transaction
is "CMBS: Moody's Approach to Rating Large Loan/Single Borrower
Transactions" published on July 7, 2000, and available on
www.moodys.com in the Ratings Methodologies sub-directory
under the Research & Ratings tab. Other methodologies and factors
that may have been considered in the process of rating this transaction
can also be found in the Rating Methodologies sub-directory on
Moody's website. In addition, Moody's publishes a weekly
summary of structured finance credit, ratings and methodologies,
available to all registered users of our website, at www.moodys.com/SFQuickCheck.
Eun Jee Park
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service
Michael M. Gerdes
Senior Vice President
Structured Finance Group
Moody's Investors Service
Moody's Investors Service
Moody's Affirms Seven and Downgrades Six CMBS Classes of JPM 2006-FL1
250 Greenwich Street
New York, NY 10007
No Related Data.
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