News Column

Fitch Affirms 11 Classes of JPMCC 2010-C2

July 16, 2014

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed 11 classes of J.P. Morgan Chase Commercial Mortgage Securities Trust, commercial mortgage pass-through certificates, series 2010-C2 (JPMCC 2010-C2). A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations are based upon the generally stable performance of the underlying collateral pool. As of the June 2014 remittance report, the pool has no delinquent or specially serviced loans. Fitch has designated four loans (23.7% of pool) as Fitch Loans of Concern. The pool's aggregate principal balance has been paid down by 7.5% to $1.02 million from $1.10 million at issuance. The entire pool reported full-year 2013 financials. Based on the full-year financial statements, the pool's overall net operating income (NOI) improved 8.9%, with the top 15 loans improving 7.3% since issuance. No loans are defeased. Interest shortfalls are currently affecting class NR.

The largest loan, Arizona Mills (16.3% of pool), is secured by a 1.24 million square foot (sf) outlet mall located in Tempe, AZ. Property performance has remained stable since issuance. As of the March 2014 rent roll, the overall mall occupancy was 95.8% and the in-line occupancy was 91%. The property's anchor tenants include JC Penney Outlet, Harkins Theatres, Burlington Coat Factory, and Sports Authority. The servicer is in the process of approving a three-year lease extension for Marshall's to July 2017. In-line sales reported for 2012 have remained relatively flat when compared to 2011, but have increased by approximately 10% since issuance. As of year-end (YE) 2013, the debt service coverage ratio (DSCR), on a net operating income (NOI) basis, was 2.26x compared to 2.31x, 2.18x, and 2.21x at YE 2012, YE 2011, and YE 2010, respectively.

The second largest loan, EDT Retail Trust Portfolio (13.2%), is secured by a portfolio of five cross-collateralized, cross-defaulted anchored shopping centers containing 2.2 million square feet located in Wisconsin, Connecticut, Florida, and Minnesota. The loan was assumed by Blackstone and DDR Corporation from EDT Retail Trust in 2012. As of the March 2014 rent roll, the overall portfolio occupancy was 97.8% with individual property occupancies ranging from 96.2% to 100%. The largest tenant at each of the individual properties has a lease until 2017 or beyond, the majority of which has additional multiple-year extension options. YE 2013 NOI DSCR was 2.17x.

The third largest loan, Goodyear Portfolio (10.4%), is secured by a portfolio of six industrial properties located in the Atlanta, Chicago, Dallas, Columbus, and York, PA manufacturing markets. The loan was assumed by American Realty Capital Properties from a joint venture between Fortress Capital and Cardinal Industrial Real Estate Services in 2014. As of the December 2013 rent roll, the portfolio remains 100% leased to Goodyear (rated 'B+/Rating Outlook Positive' by Fitch) through December 2021; however, physical occupancy was 87.9%, remaining the same since issuance, due to one of the underlying properties in McDonough, GA being dark. The servicer has indicated that Goodyear has resumed operations at the McDonough, GA location as of March 2014. YE 2013 NOI DSCR was 1.63x.

The largest Fitch Loan of Concern, The Shops at Sunset Place (7.2%), is secured by a 514,428 sf open-air lifestyle center located in Miami, FL. Property occupancy and NOI have both declined significantly from underwritten expectations at issuance. As of the March 2014 rent roll, the property was 75.5% occupied, dropping from 77.5%, 77.2%, 88.7%, and 91.5% at YE 2013, YE 2012, YE 2011, and YE 2010, respectively. Many of the tenants left when their leases expired. As a result of the drop in occupancy, NOI in 2013 has declined nearly 24% from 2010 and remains 11% below Fitch's stressed NOI at issuance. At securitization, the property had an occupancy of 88%, which was below market of 92.5%. Fitch did not apply an additional vacancy factor as the property's vacancy at that time exceeded that of the market and submarket. According to REIS and as of first quarter 2014, the overall Miami retail market reported a vacancy of 7.1%, while the Coral Gables/Kendall submarket reported a vacancy of 11.3%. Near-term rollover includes 5.5% of the square footage in 2014, 7.2% in 2015, and 8.9% in 2016. YE 2013 NOI DSCR was 1.39x, down from 1.58x, 1.79x, and 1.84x in 2012, 2011, and 2010, respectively.

RATING SENSITIVITIES

Rating Outlooks on classes A-1 through H remain Stable due to increasing credit enhancement and continued paydown.

Fitch has affirmed the following classes as follows:

--$184 million class A-1 at 'AAAsf'; Outlook Stable;

--$243.1 million class A-2 at 'AAAsf'; Outlook Stable;

--$390.5 million class A-3 at 'AAAsf'; Outlook Stable;

--Interest-only class X-A at 'AAAsf'; Outlook Stable;

--$37.2 million class B at 'AAsf'; Outlook Stable;

--$53.7 million class C at 'Asf'; Outlook Stable;

--$33 million class D at 'BBB+sf'; Outlook Stable;

--$22 million class E at 'BBB-sf'; Outlook Stable;

--$16.5 million class F at 'BBsf'; Outlook Stable;

--$13.8 million class G at 'Bsf'; Outlook Stable;

--$2.8 million class H at 'B-sf'; Outlook Stable.

Fitch does not rate the class NR and interest-only class X-B 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 then CMBS then Criteria Reports

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

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (May 21, 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=839916

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

Melissa Che, +1 212-612-7862

Director

Fitch Ratings, Inc.

33 Whitehall Street

New York, NY 10004

or

Committee Chairperson

Mary MacNeill, +1 212-908-0785

Managing Director

or

Media Relations:

Sandro Scenga, +1 212-908-0278

sandro.scenga@fitchratings.com

Source: Fitch Ratings


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