Because Fitch Ratings speculates expected losses on an REO asset, the agency has downgraded one class of JPMorgan Chase commercial mortgage securities corporation’s pass-through certificates.
The $8.8 million Class M of series 2002-CIBC5 was downgraded primarily because the New York-based ratings agency believes a former A&P grocery-anchored retail center will continue to see negative results in the future.
A loan issued by JPMorgan Chase to the 74,676 square-foot retail center located in Woodbridge, N.J. was transferred to special servicing in October 2010 due to monetary default. A&P, which closed in 2010 due to bankruptcy, occupied 69.5% of the property. The loan became REO in February.
Through the second quarter of 2012, the property is only 24% occupied. The special servicer is working to lease up and sell the property. Fitch expects significant losses upon liquidation of the asset based on recent property valuations obtained by the servicer.
Overall, the original pool of loans is expected to lose 2.6%. Meanwhile, Fitch modeled losses of 3.6% of the remaining notes.
Fitch has identified five loans as “loans of concern,” including the REO asset. The agency anticipates two classes (N and NR) to be fully depleted and class M to be impacted from losses associated with the REO asset.
As of the July 2012 distribution date, the pool’s aggregate principal balance has reduced by 69.5% to $306.7 million from $1 billion at issuance. There are 46 loans remaining in the pool, including 16 that have fully defeased.
