KBRA Downgrades Five Ratings and Affirms All Other Ratings for JPMCC 2016-JP3

KBRA downgrades the ratings of five classes of certificates and affirms all other outstanding ratings for JPMCC 2016-JP3, an $894.0 million CMBS conduit transaction. The rating actions follow a surveillance review of the transaction, which has exhibited an increase in estimated losses since KBRA's last rating changes in August 2023, including two (9.9%) top 10 loans.

As of the July 2024 remittance period, there are three specially serviced assets (12.0%), of which one (6.7%) is in foreclosure and one (3.2%) is 90+ days delinquent. KBRA identified seven K-LOCs (24.4%), including the specially serviced assets. Of the K-LOCs, four (13.0%) have estimated losses. The K-LOCs include:

Four within the top 10 (20.9%):

Westfield San Francisco Centre (3rd largest, 6.7% of the pool balance, 62.0% estimated loss severity.)
1 Kaiser Plaza (4th largest, 6.7%)
Crocker Park Phase One & Two (7th largest, 4.3%)
National Business Park (10th largest, 3.2%, 20.3%)

Two other K-LOCs (3.1%) have estimated losses:

Centrica (2.1%, 33.8%)
West LA Office - 1950 Sawtelle Boulevard (1.0%, 24.5%)

The remaining K-LOC does not have an estimated loss and represents 0.4% of the pool balance.

Excluding the K-LOCs with estimated losses, the transaction’s WA KLTV is 92.3%, compared to 94.5% at last review and 94.2% at issuance. The KDSC is 1.96x, compared to 2.07x at last review and 2.12x at issuance.

Details concerning the classes with rating changes are as follows:

Class C to BBB (sf) from A- (sf)
Class D to B- (sf) from BB- (sf)
Class E to CC (sf) from CCC (sf)
Class F to C (sf) from CC (sf)
Class X-C to B- (sf) from BB- (sf)

KBRA Downgrades Five Ratings and Affirms All Other Ratings for JPMCC 2016-JP3

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