JPMorgan Chase is in the market with its JPMorgan Chase Commercial Mortgage Securities Corp. Trust Series 2010-C2. The $1.1 billion deal is managed by JPMorgan Securities.
However, Barclays Capital analysts said in a report that as much as 49% of the underlying collateral for this new CMBS deal could be from old securitizations. "Not all of these loans were originated by JPMorgan and/or securitized in old JP deals: in fact, there are a variety of originators and shelf names," the report stated. "An overwhelming majority of these loans were originally underwritten as 5-year interest structures and securitized in 2004-05 vintages."
According to Barclays, the structure of JPMCC 2010-C2 signals a strategy of sourcing new collateral by negotiating with borrowers with loans nearing their maturity dates. This could continue to prove successful in the increasingly competitive lending environment, said analysts.
Most of the loans under the JP Morgan structure had already been paid off. Only one of the loans – a $143.1 million Macquarie DDR Portfolio II securitized in LBUBS 2005-C2 – remains outstanding.
Barclays also noted that, while the loans are older, the appraisals on these loans are recent. In some cases, that led to a reduction in the loan balance from previous securitizations. However, in some instances, it led to an increase. Similarly, there were a number of cases in which the appraisal in the old securitizations was actually lower despite the old securitizations being from the 2005 vintage.
"We believe new securitization is likely to be a very powerful driver of payoffs, improving the CMBS 1.0 credit and triggering paydowns of selected short tranches," Barclays analysts said. "LBUBS 2005-C2 is mistakenly considered the only deal that might benefit from JPMCC 2010-C2 – it is all the other deals as well, where the collateral came from. "