The interest-only class from JPMorgan Chase Commercial Mortgage Securities Corp., commercial mortgage passthrough certificates, series 2002-CIBC4 (JPMCC 2002-CIBC4) was hit with an interest shortfall in August that has resulted in a $61.3 million loss, according to a Trepp report published on Tuesday.

The interest shortfalls have hit the X-1 interest-only class, which was originally rated triple-A. According to the report, this represents the first time a triple-A bond at the top of the credit stack has impacted by an interest shortfall in the CMBS conduit world.  

The loss means that half of the deal has been wiped away and with almost $6.8 million in unpaid servicer expenses, bondholders may not see any interest for months.

According to Trepp, the classes F through K of the deal have been wiped away completely. In addition, 71% of the E class was cancelled out.

"There was no principal and no interest paid on any of the bonds in the CIBC4 deal this month," the report said. "The excess of the deal expenses over the recovery proceeds wiped out all cash in the deal and will continue to wipe out interest for months to come."

The loss was driven by the $61 million Highland Mall note. The asset made up 53.2% of the total collateral pool for the CIBC4 deal prior to August. As of July, the loan had been carrying an appraisal reduction of $55.8 million, or over 91% of the loan balance.  

The property behind the loan, a 487,000 square foot mall in Austin, TX, netted only $1,026,554 from the sale. The servicer took $811,351.66 to pay additional expenses, but that left $6.8 million still to be repaid.

At the current rate, Trepp estimated that it will take months before any principal or interest flows to bondholders in the deal. When all expenses are paid, the loss severity should be about 120%.

 

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