News Column

Fitch Downgrades 3 Classes of JPMC 2003-CIBC6

June 26, 2014

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has downgraded three classes and affirmed eight classes of JP Morgan Chase Commercial Mortgage Securities Corp. (JPMC) commercial mortgage pass-through certificates series 2003-CIBC6. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The downgrades to classes F through H are the result of interest shortfalls currently affecting these classes as well as the continued risk of interest shortfalls should additional loans transfer to the special servicer. Current interest shortfalls are predominantly related to the $3 million Essex Centre loan which had approximately $715,000 in property protection advances (PPAs) from a modification while with the special servicer. The loan has since transferred back to the master servicer; however, approximately $465,000 in PPAs has been recouped in May and June 2014 and, per the master servicer, the remaining $250,000 will be recaptured in July 2014. Fitch will not assign or maintain 'AAAsf' or 'AAsf' ratings for bonds that it believes have a high level of vulnerability to interest shortfalls and will generally only consider 'Asf' or 'BBBsf' ratings for bonds that are not expected to incur interest shortfalls. See 'Criteria for Rating Caps and Limitations in Global Structured Finance Transactions', dated May 28, 2014, for more details.

Although these classes have high credit enhancement due to amortization and loan payoffs, several larger loans are underperforming and may transfer to the special servicer. As limited upcoming paydown is expected due to many loans' longer terms, additional interest shortfalls may affect these classes in the future.

The affirmations are based sufficient credit enhancement to support the current ratings.

Fitch modeled losses of 15% of the remaining pool, including $13 million (1.2% of the original pool balance) in realized losses to date. Fitch has designated 11 loans (61.4%) as Fitch Loans of Concern, which includes three specially serviced assets (14.8%). As of the June 2014 distribution date, the pool's aggregate principal balance has been reduced by 88.8% to $119.5 million from $1.06 billion at issuance. Per the servicer reporting, three loans (7.3% of the pool) are defeased. Interest shortfalls are currently affecting classes F through NR. Of the original 128 loans, only 21 remain. Of the non-specially serviced assets, no loans are scheduled to mature until 2017.

The largest contributor to expected losses is secured by a 102,310 square foot (SF) suburban office property located in Cherry Hill, NJ (5.6% of the pool). The property experienced cash flow issues when its largest tenant, Campbell Soup Co. (previously 30% of the net rentable area [NRA]), vacated at its lease expiration. The loan transferred to special servicing in January 2013 for imminent maturity default, followed shortly thereafter by the maturity of the loan in May 2013 without repayment. The lender completed foreclosure in September 2013 and the property is now real estate owned (REO). Occupancy was reported at 28% as of April 2014. The special servicer is working to lease up the vacant space and stabilize the property prior to disposition.

The next largest contributor to expected losses is secured by a 231,242 SF suburban office building located in Southfield, MI (5% of the pool). The loan transferred to special servicing in March 2013 for imminent maturity default, followed shortly thereafter by the maturity of the loan in May 2013 without repayment. The servicer had reported that the borrower indicated difficulty in obtaining take-out financing due to the property's low occupancy, which was 71% as of September 2013, as well as poor market conditions for Detroit. The servicer is pursuing foreclosure as well as evaluating borrower proposals.

RATING SENSITIVITY

Rating Outlooks on classes C through H are Stable due to increasing credit enhancement and continued paydown. The Rating Outlook on class J is Negative as the class may be subject to a downgrade if there is further deterioration to the pool's cash flow performance and/or a decrease in value of the specially serviced loans. Additional downgrades to the distressed classes (those rated below 'B') are expected as losses are realized.

Fitch downgrades the following classes and removes them from Rating Watch Negative:

--$10.4 million class F to 'Asf' from 'AAsf'; assigns Stable Outlook;

--$13 million class G to 'BBBsf' from 'Asf'; assigns Stable Outlook.

Fitch downgrades the following class and revises the Rating Outlook as indicated:

--$15.6 million class H to 'BBsf' from 'BBBsf'; Outlook to Stable from Negative.

Fitch affirms the following classes and assigns Recovery Estimates (RE) as indicated:

--$25.9 million class C at 'AAAsf'; Outlook Stable;

--$11.7 million class D at 'AAAsf'; Outlook Stable;

--$14.3 million class E at 'AAAsf'; Outlook Stable;

--$5.2 million class J at 'BBsf'; Outlook Negative;

--$7.8 million class K at 'CCCsf'; RE 95%;

--$5.2 million class L at 'CCsf'; RE 0%;

--$3.9 million class M at 'CCsf'; RE 0%;

--$1.3 million class N at 'Csf'; RE 0%.

The class A-1, A-2, B and X-2 certificates have paid in full. Fitch does not rate the class NR, BM-1, BM-2, BM-3, AC-1, AC-2 and AC-3 certificates. Fitch previously withdrew the rating on the interest-only class X-1 certificates.

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 11, 2013 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at 'www.fitchratings.com' under the following headers:

Structured Finance >> CMBS >> Criteria Reports

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (May 28, 2014);

--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 11, 2013).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=836722

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

Primary Analyst

Dustin Pike, +1-212-612-7875

Associate Director

Fitch Ratings, Inc.

33 Whitehall Street

New York, NY 10004

or

Committee Chairperson

Britt Johnson, +1-312-606-2341

Senior Director

or

Media Relations

Sandro Scenga, New York, +1-212-908-0278

sandro.scenga@fitchratings.com

Source: Fitch Ratings


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