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By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

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Rating Action:

Moody's Upgrades Two and Affirms Three Classes of JPMCC 2003-LN1

19 Jun 2015

Approximately $38 Million of Structured Securities Affected

New York, June 19, 2015 -- Moody's Investors Service has upgraded the rating on two classes and affirmed the ratings on three classes in J.P. Morgan Chase Commercial Mortgage Securities Corp., Commercial Pass-Through Certificates, Series 2003-LN1 as follows:

Cl. H, Upgraded to A2 (sf); previously on Oct 30, 2014 Upgraded to Baa3 (sf)

Cl. J, Upgraded to B1 (sf); previously on Oct 30, 2014 Affirmed B3 (sf)

Cl. K, Affirmed Ca (sf); previously on Oct 30, 2014 Affirmed Ca (sf)

Cl. L, Affirmed C (sf); previously on Oct 30, 2014 Affirmed C (sf)

Cl. X-1, Affirmed Caa3 (sf); previously on Oct 30, 2014 Affirmed Caa3 (sf)

RATINGS RATIONALE

The ratings on classes H and J were upgraded based primarily on an increase in credit support resulting from loan paydowns. The deal has paid down 16% since Moody's last review.

The ratings on classes K and L were affirmed because the ratings are consistent with Moody's expected loss.

The ratings on the IO class (Class X-1) was affirmed based on the credit performance (or the weighted average rating factor) of the referenced classes.

Moody's rating action reflects a base expected loss of 26.7% of the current balance, compared to 20.8% at Moody's last review. Moody's base expected loss plus realized losses is now 4.0% of the original pooled balance, compared to 3.6% at the last review. Moody's provides a current list of base expected losses for conduit and fusion CMBS transactions on moodys.com at http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF215255.

FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING:

The performance expectations for a given variable indicate Moody's forward-looking view of the likely range of performance over the medium term. Performance that falls outside the given range can indicate that the collateral's credit quality is stronger or weaker than Moody's had previously expected.

Factors that could lead to an upgrade of the ratings include a significant amount of loan paydowns or amortization, an increase in the pool's share of defeasance or an improvement in pool performance.

Factors that could lead to a downgrade of the ratings include a decline in the performance of the pool, loan concentration, an increase in realized and expected losses from specially serviced and troubled loans or interest shortfalls.

METHODOLOGY UNDERLYING THE RATING ACTION

The principal methodology used in this rating was "Moody's Approach to Rating CMBS Large Loan/Single Borrower Transactions" published in July 2000. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

DESCRIPTION OF MODELS USED

Moody's uses a variation of Herf to measure the diversity of loan sizes, where a higher number represents greater diversity. Loan concentration has an important bearing on potential rating volatility, including the risk of multiple notch downgrades under adverse circumstances. The credit neutral Herf score is 40. The pool has a Herf of 3, compared to 4 at Moody's last review.

Moody's used the excel-based Large Loan Model. The large loan model derives credit enhancement levels based on an aggregation of adjusted loan-level proceeds derived from Moody's loan-level LTV ratios. Major adjustments to determining proceeds include leverage, loan structure, property type and sponsorship. Moody's also further adjusts these aggregated proceeds for any pooling benefits associated with loan level diversity and other concentrations and correlations.

DEAL PERFORMANCE

As of the June 15, 2015 distribution date, the transaction's aggregate pooled certificate balance has decreased by 97% to $38.1 million from $1.2 billion at securitization. The certificates are collateralized by six mortgage loans. Two loans, constituting 9.5% of the pool, have defeased and are secured by US government securities.

One loan, constituting 8% of the pool, is on the master servicer's watchlist. The watchlist includes loans that meet certain portfolio review guidelines established as part of the CRE Finance Council (CREFC) monthly reporting package. As part of Moody's ongoing monitoring of a transaction, the agency reviews the watchlist to assess which loans have material issues that could affect performance.

Twelve loans have been liquidated from the pool with a loss, contributing to an aggregate certificate realized loss of $37.5 million (for an average loss severity of 47%). One loan, the Senate Plaza Loan ($9.7 million -- 25.4% of the pool) is currently in special servicing. The loan is secured by a 231,000 square foot (SF) office property located in Camp Hill, Pennsylvania, near downtown Harrisburg. The sole tenant, which had occupied 100% of the property, vacated at its lease expiration in 2013 and the property remains fully vacant. The loan initially transferred to special servicing in July 2013 for maturity default and became REO in in December 2013 via a deed-in-lieu of foreclosure. The special servicer is currently marketing the asset for sale while trying to lease-up the property. An April 2015 appraisal valued the property at $5.6 million.

In addition to the special serviced loan, Moody's has assumed a high default probability for one poorly performing loan, constituting 8.1% of the pool, and has estimated an aggregate loss of approximately $10 million from the troubled loan and specially serviced loan.

The pool contains three performing non-defeased loans, representing 65% of the pool balance. The largest is the Piilani Shopping Center Loan ($16.4 million -- 43.0% of the pool), which is secured by 66,000 SF retail center located in Kihei, Hawaii. As of March 2015, the property was approximately 96% leased and has been over 95% leased for the past three years. Property performance has been improved due to an increase in base rental revenue. The two largest tenants in the collateral are Kihei-Wailea Medical Center (10% of the NRA; expiration May 2022) and Outback Steakhouse (9% of the NRA; lease expiration November 2020). The collateral is shadow anchored by a Safeway, Inc. grocery store. Hilo Hatties was formerly on the site but closed its store in January 2015. Moody's LTV and stressed DSCR are 55% and 1.75X, respectively, compared to 60% and 1.59X at the last review. Moody's stressed DSCR is based on Moody's NCF and a 9.25% stress rate the agency applied to the loan balance.

The second largest loan is the Ralphs Grocery Store Loan ($5.4 million -- 14.1% of the pool), which is secured by a single tenant grocery store located in Los Angeles, California. The property is 100% leased to Ralph's, a subsidiary of Kroger Co. (Baa2 senior unsecured rating, stable outlook) through 2028. Ralph's signed a 15-year lease extension in 2013. This loan benefits from amortization and matures in August 2016. Moody's LTV and stressed DSCR are 28% and 3.56X, respectively, compared to 28% and 3.47X at the last review.

The third largest loan is the Shoppes at Wolfchase Loan ($3.1 million -- 8.1% of the pool), which is secured by 34,000 SF retail property near the Wolfchase Galleria Mall in Memphis, Tennessee. As of June 2015, the property was 49% leased, the same as at last review. The largest tenant is Buffalo Wild Wings (20% of the NRA; lease expiration September 2019). The loan is on the servicer's watchlist for low occupancy and DSCR. Due to the poor performance, Moody's identified this as a troubled loan.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions of the disclosure form.

The analysis includes an assessment of collateral characteristics and performance to determine the expected collateral loss or a range of expected collateral losses or cash flows to the rated instruments. As a second step, Moody's estimates expected collateral losses or cash flows using a quantitative tool that takes into account credit enhancement, loss allocation and other structural features, to derive the expected loss for each rated instrument.

Moody's did not use any stress scenario simulations in its analysis.

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Matthew Halpern
Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Keith Banhazl
Senior Vice President
Structured Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Upgrades Two and Affirms Three Classes of JPMCC 2003-LN1
No Related Data.
© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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