Five JPMDB Commercial Mortgage Securities Trust 2017-C5 Ratings Affirmed

  • We affirmed our ratings on five classes from JPMDB Commercial Mortgage Securities Trust 2017-C5, a U.S. CMBS transaction.
  • The affirmations reflect our analysis of the transaction, which included a review of the credit characteristics and performance of the remaining loans in the pool, the transaction's structure, and the liquidity available to the trust.
  • While COVID-19 will likely have an accelerated effect on performance declines for certain properties, especially with retail and lodging exposure, today's rating actions do not specifically address the outbreak of the virus.
FARMERS BRANCH (S&P Global Ratings) March 26, 2020--S&P Global Ratings today 
affirmed its ratings on five classes of commercial mortgage pass-through 
certificates from JPMDB Commercial Mortgage Securities Trust 2017-C5, a U.S. 
commercial mortgage-backed securities (CMBS) transaction (see list).

For the affirmations, our expectation of credit enhancement was in line with 
the affirmed rating levels. 

S&P Global Ratings acknowledges a high degree of uncertainty about the rate of 
spread and peak of the coronavirus outbreak. Some government authorities 
estimate the pandemic will peak around midyear, and we are using this 
assumption in assessing the economic and credit implications. In our view, the 
measures adopted to contain COVID-19 have pushed the global economy into 
recession which could also hurt employment levels or commercial real estate 
markets (see our macroeconomic and credit updates here: 
www.spglobal.com/ratings). As the situation evolves, we will update our 
assumptions and estimates accordingly.

TRANSACTION SUMMARY

As of the March 17, 2020, trustee remittance report, the collateral pool 
balance was $993.6 million, which is 95.2% of the pool balance at issuance. 
The pool currently includes 33 loans (reflecting crossed loans), down from 35 
loans at issuance. Three of these loans ($113.1 million, 11.4%) are with the 
special servicer and one other ($35.0 million, 3.5%) is on the master 
servicer's watchlist.

We calculated a 1.79x S&P Global Ratings' weighted average debt service 
coverage (DSC) and 84.4% S&P Global Ratings weighted average loan-to-value 
(LTV) ratio using a 7.90% S&P Global Ratings' weighted average capitalization 
rate. The DSC, LTV, and capitalization rate calculations exclude the 229 West 
43rd Street Retail Condo asset. The top 10 loans have an aggregate outstanding 
pool trust balance of $556.2 million (56.0%). Using adjusted servicer-reported 
numbers, we calculated an S&P Global Ratings' weighted average DSC and LTV of 
1.82x and 81.9%, respectively, for the top 10 loans.

To date, the transaction has not experienced any principal losses. We expect 
losses to reach approximately 2.8% of the original pool trust balance in the 
near term, based on losses we expect upon the eventual resolution of 229 West 
43rd Street Retail Condo loan.

CREDIT CONSIDERATIONS

As of the March 17, 2020, trustee remittance report, three ($113.1 million, 
11.4%) loans in the pool were with the special servicer. Details of the two 
largest specially serviced loans, one of which is a top 10 loan, are as 
follows: 

  • The 229 West 43rd Street Retail Condo loan ($80.0 million, 8.1%) is the largest loan in the pool and has a reported total exposure of $80.3 million. The loan is secured by the condominium interest in a 248,457-sq.-ft. retail property, built in 1913, in New York, N.Y. The loan was transferred to the special servicer on Dec. 24, 2019, due to imminent monetary default. The reported DSC and occupancy as of Sept. 30, 2019, were 0.94x and 95.0%, respectively. Based on media reports, we understand that the occupancy rate has further declined. Given the recent decline in performance at this property, we will continue to observe and track the asset going forward. We currently expect a moderate loss (26%-59%) upon this loan's eventual resolution.

  • The Shopko Oregon Portfolio loan ($26.8 million, 2.7%) is the second-largest specially serviced loan in the pool, with a reported total exposure of $26.8 million. The loan is secured by three retail properties in Oregon--Shopko Bend, Shopko Eugene and Shopko Salem--comprised of 319,006 sq. ft. previously occupied by Shopko. In January 2019, Shopko filed for Chapter 11 Bankruptcy protection, announcing soon after the closure of all 360 of its retail stores. The loan was transferred to the special servicer on April 29, 2019, due to imminent monetary default. The reported DSC and occupancy as of Sept. 30, 2019, were 0.50x and 63.0%, respectively. As per the servicer's reporting comments, the borrower was able to finalize leases for the entire Bend and Eugene properties in July 2019, followed by a lease for the Salem property in November 2019, though full rent commencement is not scheduled until Q2 2020. As a result, this loan was recently reinstated pursuant to a forbearance agreement and is expected to be returned as performing in the second quarter of 2020.
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