Fitch Ratings has affirmed all rated classes of J.P. Morgan Chase
Commercial Mortgage Securities Trust 2012-HSBC (JPMCC 2012-HSBC). A full
list of rating actions follows at the end of this release.
KEY RATING DRIVERS
The affirmation is based on the performance of the underlying trust
asset continuing to be in line with expectations at issuance. As of the
June 2016 remittance, the property's physical occupancy has stabilized
as expected at issuance, with a current occupancy of 99.5% compared with
92% at issuance. The loan has 12 months left in its five-year
interest-only period with a final maturity in July 2022.
HSBC Tower is a 30-story, 865,339 square foot (sf), high-rise office
building located in the Grand Central submarket in midtown Manhattan.
The three largest tenants are HSBC (60%), Baker & McKenzie (12%),and Man
Investments Holding Inc. (6%), with lease expirations in 2020, 2028, and
The property at issuance was 92% leased, with some tenants awaiting the
build-out of their units; however, all tenants are currently in place.
As of the December 2015 rent roll, the property is 99.5% occupied with
below market-average rent at $62 sf. There is minimal near-term
rollover. Per REIS as of first quarter 2016, the Grand Central submarket
Class A office vacancy is 7.5% with average asking rent of $87 sf. As of
trailing 12-months March 2016, Fitch's net cash flow (NCF) has increased
9% since issuance. Fitch's NCF gives credit for the investment-grade
nature of the larger tenants and reserves, as well as standard
assumptions of vacancy, management fees and other expenses.
The loan at issuance was structured with a hard lockbox and both ongoing
and upfront reserves. Reserves account for current and future expenses
for leasing costs and capital expenditures, as well as upfront reserves
to cover ongoing capital improvements and free rent. A rollover reserve
of $1.25 million per annum is in place for HSBC as is a cash flow sweep
that will be triggered 30 months prior to HSBC's lease expiration. The
current balance of the leasing reserve and replacement reserve as of
June 2015 are $1,149,107 and $91,871, respectively.
The Stable Outlooks on all classes reflect the likelihood of future
affirmations. Future downgrades are possible should there be a material
decline in portfolio cash flow or occupancy.
DUE DILIGENCE USAGE
No third-party due diligence was provided or reviewed in relation to
this rating action.
Fitch has affirmed the following ratings:
--$200,000,000 class A at 'AAAsf'; Outlook Stable;
--Interest-only class X-A* at 'AAAsf'; Outlook Stable;
--Interest-only class X-B** at 'BBB-sf'; Outlook Stable;
--$15,000,000 class B at 'AAsf'; Outlook Stable;
--$21,400,000 class C at 'Asf'; Outlook Stable;
--$58,600,000 class D at 'BBB-sf'; Outlook Stable;
--$5,000,000 class E at 'BBB-sf'; Outlook Stable.
*Notional balance of class A
**Notional balance of classes B, C, D and E
Additional information is available at www.fitchratings.com.
Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14
Criteria for Analyzing Large Loans in U.S. Commercial Mortgage
Transactions (pub. 27 Aug 2015)
Criteria for Rating Caps and Limitations in Global Structured Finance
Transactions (pub. 16 Jun 2016)
Global Structured Finance Rating Criteria (pub. 27 Jun 2016)
JPMCC Mortgage Securities Trust 2012-HSBC -- Appendix
Dodd-Frank Rating Information Disclosure Form
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.
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
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