Fitch Ratings has issued a presale report on J.P. Morgan Chase
Commercial Mortgage Securities Trust 2016-NINE Mortgage Trust commercial
Mortgage Pass-Through certificates Series 2016-NINE.
Fitch expects to rate the transaction and assign rating outlooks as
--$713,724,000 class A 'AAAsf'; Outlook Stable;
--$713,724,000a class X-A 'AAAsf'; Outlook Stable;
--$186,276,000 class B 'AA-sf'; Outlook Stable;
(a) Notional amount and interest-only.
The expected ratings are based on information provided by the issuer as
of Aug. 30, 2016.
The certificates represent the beneficial interests in the mortgage loan
securing the fee and leasehold interests in a 1.68 million square foot
(sf), 50-story office tower at 9 West 57th Street in New York, NY.
Proceeds of the loan were used to refinance existing debt, fund
reserves, pay closing costs and return equity to the borrower. The
certificates will follow a sequential-pay structure.
KEY RATING DRIVERS
Iconic Manhattan Office Building: 9 West 57th is a 50-story, class A
office building located within the Plaza District submarket in Midtown
Manhattan. The property is one of the premier office buildings in the
U.S., benefiting from an architecturally significant design, excellent
location, and unparalleled views of Central Park. Fitch Ratings
considers the property to be one of Manhattan's highest quality office
Low Occupancy and Uncaptured Income Potential: As of June 2016, the
property was 63.5% occupied, well below the Plaza District submarket
occupancy of 90.1%, according to Reis data. The sponsor is very
discerning in terms of tenant selection and considers image, reputation,
and financial wherewithal before filling vacancies. The sponsor prefers
to leave space vacant and wait for the preferred type of tenant at the
rent level the property has been able to maintain. Given the unique
positioning of the asset, value is apparent in the vacant space. Such
value is not typically accounted for by Fitch in assets not meeting the
rarely observed positioning of the subject.
Long-Term Ownership: The sponsor originally developed the property in
1972 and has continually upgraded and improved it for over 40 years. 9
West 57th serves as the focal point of the sponsor's portfolio, which
consists of approximately 18 commercial and residential properties in
New York City. The sponsor has purchased many of the buildings
surrounding the property in order to protect the views of 9 West 57th.
Fitch found that the 'AAAsf' class could withstand an approximate 70.3%
decrease to the most recent actual net cash flow (NCF) prior to
experiencing $1 of loss to the 'AAAsf' rated class. Fitch performed
several stress scenarios in which the Fitch NCF was stressed. Fitch
determined that a 49.7% reduction in Fitch's implied NCF would cause the
notes to break even at a 1x debt service coverage ratio (DSCR), based on
the actual debt service.
Fitch evaluated the sensitivity of the ratings for class A and found
that a 10% decline in Fitch's implied NCF would result in a one-category
downgrade, while a 34% decline would result in a downgrade to below
The Rating Sensitivity section in the presale report includes a detailed
explanation of additional stresses and sensitivities. Key Rating Drivers
and Rating Sensitivities are further described in the accompanying
presale report. The presale report is available to all investors on
Fitch's web site 'www.fitchratings.com'
or by clicking on the link.
USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10
Fitch was provided with third-party due diligence information from Ernst
and Young, LLP. The third-party due diligence information was provided
on ABS Due Diligence Form-15E and focused on a comparison and
re-computation of certain characteristics with respect to the mortgage
loan and related mortgaged properties in the data file. Fitch considered
this information in its analysis, and the findings did not have an
impact on our analysis.
REPRESENTATIONS, WARRANTIES AND ENFORCEMENT MECHANISMS
A description of the transaction's representations, warranties and
enforcement mechanisms (RW&Es) that are disclosed in the offering
document and which relate to the underlying asset pool is available by
accessing the appendix referenced under "Related Research" below. The
appendix also contains a comparison of these RW&Es to those Fitch
considers typical for the asset class as detailed in the Special Report
titled "Representations, Warranties and Enforcement Mechanisms in Global
Structured Finance Transactions," dated May 2016.
Additional information is available at www.fitchratings.com.
Counterparty Criteria for Structured Finance and Covered Bonds (pub. 01
Criteria for Analyzing Large Loans in U.S. Commercial Mortgage
Transactions (pub. 18 Aug 2016)
Global Structured Finance Rating Criteria (pub. 27 Jun 2016)
Rating Criteria for U.S. Commercial Mortgage Servicers (pub. 14 Feb 2014)
JPMCC 2016-NINE Mortgage Trust Commercial Mortgage Pass-Through
JPMCC 2016-9W57 Commercial Mortgage Pass-Through Certificates -- Appendix
Dodd-Frank Rating Information Disclosure Form
ABS Due Diligence Form 15E 1
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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