DBRS Morningstar upgrades four categories from JP Morgan Chase Commercial Mortgage Securities Trust 2011-C4

DBRS Limited (DBRS Morningstar) has raised the ratings of four classes of Commercial Mortgage Transfer Certificates, Series 2011-C4 issued by JP Morgan Chase Commercial Mortgage-Backed Securities Trust 2011-C4.

Class E to AA (sf) from AA (low) (sf)

Class F to A (sf) from BBB (low) (sf)

Class G to BBB (sf) from BB (low) (sf)

Class H to BB (low) (sf) to B (sf)

DBRS Morningstar also confirmed the remaining category ratings as follows:

Class C to AAA (fs)

Class D to AAA (fs)

All trends are stable. The rating upgrades and confirmations reflect the pool’s significant deleveraging and sufficient credit support against the remaining collateral in the trust. Since the April 2022 installment, the trust balance had been reduced by 89.7% since issuance, following the recent repayment of the IPCC – Capview Portfolio A and B loans, which contributed approximately $22.7 million in principal to the Class C certificate. Only one loan, Newport Center (Prospectus ID#1, 100.0% of the pool) remains outstanding in the pool.

The Newport Center loan is secured by a 782,000 square foot (sf) portion of a 1.15 million square foot regional shopping center in Jersey City, New Jersey. The mall is owned by a joint venture between Melvin Simon & Associates and the LeFrak family, which also developed the Newport Master Planned Community where the property is located. The management company of Simon Real Estate Group manages the mall. The loan was transferred to the special service in July 2020 when the borrower has applied for relief for coronavirus disease (COVID-19) and the loan has been returned to the repairing master in January 2021 following an amendment that allowed for a brief deferral of reserve payments.

The loan was transferred a second time to the special service after the borrower failed to repay the loan on the date May 2021 due date. An amendment was granted in August 2021the terms of which provided for an extension of the maturity date to May 2023 and an additional 12 month extension option. In addition, the borrower was required to reinstate the loan, execute a new recourse guarantee for 10% of the outstanding principal balance, and maintain the loan in cash management for the duration of the extension. The loan was returned to the master repairer in November 2021 and remains relevant.

Despite slight cash declines since the start of the pandemic, real estate operations continue to comfortably cover debt service payments. According to September 2021 report, the annualized debt service coverage ratio was 1.74x(x), compared to 1.85x in YE2020 and 2.08x in YE2019. The slight year-over-year (YOY) decrease reflects higher expenses and lower expense reimbursements. Occupancy has always been strong, reported at 99.9% as of February 2022compared to 96.0% at December 2019, with no significant rolling short-term leases. Online sales for the 12 month period ended February 28, 2022have been reported as $728 per square foot (psf), according to the latest sales report, up from YE2020 sales of $522 psf.

Newport Center is anchored by Macy’s (23.6% of the total net lettable area (NRA), at maturity January 2028), sear (19.8% of total NRA, subject to ground lease expiring in October 2027), JCPenney (18.5% of total NRA, expiring January 2050), Kohl’s (14.9% of total NRA, expiring January 2028), and an 11-screen AMC Theaters (4.9% of total NRA, expiring January 2026), all of whom reported difficulties before and during the pandemic. Although there are concerns about the property’s anchor mix, the property is well located in an infill urban submarket, with high barriers to entry and minimal direct competition in the immediate area.

DBRS Morningstar remains cautious about the prospects for short-term refinancing of regional shopping centers in general, given the lack of liquidity for this type of property and changing consumer trends. Mitigating this concern is the continued support of the guarantee by the sponsor, historical performance including the pandemic, strong sales and a continued cash flow sweep which can be used to repay the loan on a quarterly basis. Moreover, given the ideal position of the subject in City of Jersey-with direct access to manhattan through the dutch tunnel and the PATH train – and lack of competition, DBRS Morningstar believes the asset is well positioned to continue to attract buyers and stable projects to improve performance through loan maturity. DBRS Morningstar also notes that the mall was able to retain its value even throughout the pandemic, based on the April 2021 estimated value of $315.0 millioni.e. a decrease of only 6.5% compared to the issue value of $337.0 million and is well above the current loan amount of $151.0 million. As part of its analysis, DBRS Morningstar incorporated a conservative property cash flow stress test to determine the sustainability of the ratings and further support upgrades.

A description of how DBRS Morningstar considers ESG factors in the DBRS Morningstar analytical framework is available in DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

All ratings are subject to monitoring, which could result in ratings being upgraded, downgraded, revised, confirmed or discontinued by DBRS Morningstar.

DBRS Morningstar provides updated analysis and in-depth commentary on the DBRS Viewpoint platform for this transaction.

The DBRS Viewpoint platform provides additional information about this transaction and the underlying loans, including DBRS Morningstar metrics, commentary, servicing agent reported cash flow, and other performance-related data.

For free access to this content, please register with the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com.

Remarks:

All figures are in WE dollars unless otherwise specified.

The primary methodology is the North American CMBS Monitoring Methodology (March 4, 2022), which can be found on dbrsmorningstar.com under Methodologies and Criteria. For a list of structured finance related methodologies that may be used during the rating process, please see the DBRS Morningstar Global Structured Finance Related Methodologies document, which can be found on dbrsmorningstar.com in the Commentary tab under Regulatory Affairs. Please note that not all associated methodologies listed in a Principal Structured Finance Asset Class Methodology can be used to assess or monitor an individual structured finance or debt security.

DBRS Sovereign Morningstar group publishes reference macroeconomic scenarios for rated sovereigns. DBRS Morningstar’s analysis considered impacts consistent with baseline scenarios as set out in the following report: https://www.dbrsmorningstar.com/research/384482/baseline-macroeconomic-scenarios-application-to-credit-ratings.

Related regulatory information pursuant to National Instrument 25-101 Designated Rating Organizations is incorporated by reference and may be viewed by clicking the link under Related Documents or by contacting us at info@dbrsmorningstar.com.

The rated entity or its related entities participated in the rating process for this rating metric. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the relevant appendix for more information on the sensitivity of the assumptions used in the rating process.

For more information about this credit or this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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Ratings

Date Issued	Debt Rated	Action	Rating	Trend	Attributesi

US = Lead Analyst based in the USA

CA = Lead Analyst based in Canada

EU = Lead Analyst based in EU

UK = Lead Analyst based in UK

E= EU approved

U= UK approved

Unsolicited participation with access

Unsolicited participation without access

Unsolicited Non Participating

18-May-22	Commercial Mortgage Pass-Through Certificates, Series 2011-C4, Class C	Confirmed	AAA (sf)	Stb	CA
18-May-22	Commercial Mortgage Pass-Through Certificates, Series 2011-C4, Class D	Confirmed	AAA (sf)	Stb	CA
18-May-22	Commercial Mortgage Pass-Through Certificates, Series 2011-C4, Class E	Upgraded	AA (sf)	Stb	CA
18-May-22	Commercial Mortgage Pass-Through Certificates, Series 2011-C4, Class F	Upgraded	A (sf)	Stb	CA
18-May-22	Commercial Mortgage Pass-Through Certificates, Series 2011-C4, Class G	Upgraded	BBB (sf)	Stb	CA
18-May-22	Commercial Mortgage Pass-Through Certificates, Series 2011-C4, Class H	Upgraded	BB (low) (sf)	Stb	CA

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