Troubled JP Morgan CMBS deal takes $82m hit

Seven loans from a JP Morgan CMBS deal from 2006 have been liquidated, amounting to more than $82m in write-offs, according to data from research firm Trepp.

Seven loans from a JP Morgan CMBS deal from 2006 have been liquidated, amounting to more than $82m in write-offs, Real Estate Capital has learned based on data from research firm Trepp.

The liquidations bump the cumulative bond loss on JP Morgan Chase Commercial Mortgage Securities Corp. Series 2006-LDP7 to 6.57%.

download (3)The largest loss is $48.5m of the $50.7m Shoreview Corporate Center loan, which was secured by a 553,000 sq ft office building located in the St. Paul submarket of Shoreview, Minnesota and made up 2% of the pool.

“The main significance lies in the losses that [2006-LDP7’s] bondholders will incur,” said Trepp analyst Sean Barrie. “They aren’t out of the woods yet, as the deal still has $371m in delinquent loans and $180m in appraisal reductions.”

Additional losses include $13.8m of the $23.4m K-V Pharmaceutical Portfolio loan (Lee’s Summit, Missouri) and $2.1m of the $5.6m Cedar Creek Mall loan elsewhere in the state; $10.6m of the $28.3m Shoppes at Jupiter loan in Jupiter, Florida; $2.7m of the $10.2m of the Matthews Festival loan in Matthews, North Carolina; $2.5m of the $9m Leggett & Platt loan in Atlanta, Georgia; and $4m of the $6.5m loan in Tacoma, Washington.

The Shoreview loan was transferred to special servicing in October 2009 for imminent default and has been real estate owned (REO) since March 2012. A July 2014 appraisal valued the property at just $29.1m, according to Moody’s Investors Service.

By the May 15, 2015 distribution date on the deal, just before Moody’s issued a report affirming the ratings on eight classes and downgrading six, the transaction’s aggregate certificate balance had decreased by 28% to $2.8bn from $3.9bn at securitization.

Moody’s noted at the time that the largest specially serviced loan in the deal — one to keep an eye on for further losses as it has fallen into foreclosure — is the multi-property Retail Portfolio Loan, formerly known as the Westfield Centro Portfolio, with a $240m original balance, or about 8.4% of the pool.

That loan is secured by four regional malls and one community shopping center located in California, Colorado, Connecticut, Missouri and Ohio.

The largest performing conduit loan in the deal is the One & Two Prudential Plaza – A Note Loan, with a $168m balance secured by two cross-collateralized and cross-defaulted Class A office buildings located in the East Loop submarket of Chicago, Illinois.