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Rating Action:

Moody's Affirms Four, Upgrades Three and Downgrades One Class of WBCMT 2004-C14

28 Aug 2014

Approximately $35 Million of Structured Securities Affected

New York, August 28, 2014 -- Moody's Investors Service has affirmed the ratings on four classes, upgraded the ratings on three classes and downgraded the rating on one class of Wachovia Bank Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2004-C14 as follows:

Cl. H, Upgraded to Baa2 (sf); previously on Sep 5, 2013 Affirmed Ba3 (sf)

Cl. J, Upgraded to Ba2 (sf); previously on Sep 5, 2013 Affirmed B1 (sf)

Cl. K, Upgraded to Ba3 (sf); previously on Sep 5, 2013 Affirmed B2 (sf)

Cl. L, Affirmed Caa1 (sf); previously on Sep 5, 2013 Affirmed Caa1 (sf)

Cl. M, Affirmed Caa3 (sf); previously on Sep 5, 2013 Downgraded to Caa3 (sf)

Cl. N, Affirmed C (sf); previously on Sep 5, 2013 Downgraded to C (sf)

Cl. O, Affirmed C (sf); previously on Sep 5, 2013 Downgraded to C (sf)

Cl. X-C, Downgraded to Caa2 (sf); previously on Sep 5, 2013 Affirmed Ba3 (sf)

RATINGS RATIONALE

The ratings on P&I classes L through O were affirmed because the ratings are consistent with Moody's expected loss.

The ratings on P&I classes H through K were upgraded based primarily on an increase in credit support resulting from loan paydowns and amortization. The deal has paid down 92% since Moody's last review.

The rating on the IO Class (Class X-C) was downgraded due to the decline in the credit performance of its reference classes resulting from principal paydowns of higher quality reference classes.

Moody's rating action reflects a base expected loss of 36.3% of the current balance compared to 7.1% at Moody's last review. Moody's base expected loss plus realized losses is now 2.3% of the original pooled balance compared to 3.7% at the last review. Moody's provides a current list of base expected losses for conduit and fusion CMBS transactions on moodys.com at http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF215255.

FACTORS THAT WOULD LEAD TO A UPGRADE OR DOWNGRADE OF THE RATING:

The performance expectations for a given variable indicate Moody's forward-looking view of the likely range of performance over the medium term. Performance that falls outside the given range can indicate that the collateral's credit quality is stronger or weaker than Moody's had previously expected.

Factors that could lead to an upgrade of the ratings include a significant amount of loan paydowns or amortization, an increase in the pool's share of defeasance or an improvement in pool performance.

Factors that could lead to a downgrade of the ratings include a decline in the performance of the pool, loan concentration, an increase in realized and expected losses from specially serviced and troubled loans or interest shortfalls.

METHODOLOGY UNDERLYING THE RATING ACTION:

The methodologies used in this rating were "Moody's Approach to Rating U.S. CMBS Conduit Transactions" published in September 2000 and "Moody's Approach to Rating CMBS Large Loan/Single Borrower Transactions" published in July 2000. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

Moody's analysis incorporated a loss and recovery approach in rating this transaction since 68% of the pool is in special servicing and performing conduit loans only represent 32% of the pool. In this approach, Moody's determines a probability of default for each specially serviced loan that it expects will generate a loss and estimates a loss given default based on a review of broker's opinions of value (if available), other information from the special servicer, available market data and Moody's internal data. The loss given default for each loan also takes into consideration repayment of servicer advances to date, estimated future advances and closing costs. Translating the probability of default and loss given default into an expected loss estimate, Moody's then applies the aggregate loss from specially serviced loans to the most junior classes and the recovery as a pay down of principal to the most senior classes.

DESCRIPTION OF MODELS USED

Moody's review used the excel-based CMBS Conduit Model v 2.64, which it uses for both conduit and fusion transactions. Conduit model results at the Aa2 (sf) level are driven by property type, Moody's actual and stressed DSCR, and Moody's property quality grade (which reflects the capitalization rate Moody's uses to estimate Moody's value). Conduit model results at the B2 (sf) level are based on a paydown analysis using the individual loan-level Moody's LTV ratio. Moody's may consider other concentrations and correlations in its analysis. Based on the model pooled credit enhancement levels of Aa2 (sf) and B2 (sf), the required credit enhancement on the remaining conduit classes are either interpolated between these two data points or determined based on a multiple or ratio of either of these two data points. For fusion deals, Moody's merges the credit enhancement for loans with investment-grade credit assessments with the conduit model credit enhancement for an overall model result. Moody's incorporates negative pooling (adding credit enhancement at the credit assessment level) for loans with similar credit assessments in the same transaction.

Moody's uses a variation of Herf to measure the diversity of loan sizes, where a higher number represents greater diversity. Loan concentration has an important bearing on potential rating volatility, including the risk of multiple notch downgrades under adverse circumstances. The credit neutral Herf score is 40. The pool has a Herf of 5 compared to 18 at Moody's last review.

When the Herf falls below 20, Moody's uses the excel-based Large Loan Model v 8.6 and then reconciles and weights the results from the conduit and large loan models in formulating a rating recommendation. The large loan model derives credit enhancement levels based on an aggregation of adjusted loan-level proceeds derived from Moody's loan-level LTV ratios. Major adjustments to determining proceeds include leverage, loan structure, property type and sponsorship. Moody's also further adjusts these aggregated proceeds for any pooling benefits associated with loan level diversity and other concentrations and correlations.

DEAL PERFORMANCE

As of the August 15, 2014 distribution date, the transaction's aggregate certificate balance has decreased by 96% to $41 million from $1.1 billion at securitization. The certificates are collateralized by nine mortgage loans ranging in size from 2% to 31% of the pool, with the top three loans constituting 68% of the pool.

Three loans, constituting 16% of the pool, are on the master servicer's watchlist. The watchlist includes loans that meet certain portfolio review guidelines established as part of the CRE Finance Council (CREFC) monthly reporting package. As part of Moody's ongoing monitoring of a transaction, the agency reviews the watchlist to assess which loans have material issues that could affect performance.

Five loans have been liquidated from the pool, resulting in an aggregate realized loss of $10.4 million (for an average loss severity of 29%). Three loans, constituting 68% of the pool, are currently in special servicing. The largest specially serviced loan is the Hot Springs Mall Loan ($12.8 million - 31% of the pool), which is secured by 319,000 square foot (SF) regional shopping mall located in Hot Springs, Arkansas. The mall is anchored by JCPenney, Sears and Dillards (which is not part of the collateral). The mall was 89% leased as of July 2014. The loan transferred to special servicing in June of 2014 due to imminent maturity default. The borrower indicated they plan to submit a workout proposal and would cooperate with the lender regarding a foreclosure if an agreement is not reached.

The second largest specially serviced loan is the Rockdale Square Shopping Center Loan ($9.5 million -- 23% of the pool), which is secured by an anchored retail center located approximately 27 miles east of Atlanta in Conyers, Georgia. The loan transferred to special servicing in April 2014 due to imminent maturity default. The property was previously anchored by a grocery tenant who vacated in 2012 and its lease expired in May 2014. The special servicer indicated a foreclosure sale was scheduled for August 2014.

The third special serviced loan is the Park 80 East Loan ($5.8 million -- 14% of the pool), which is secured by a 83,000 SF office property located in Saddle Brook, New Jersey. The loan transferred to special servicing in April 2014 due to imminent maturity default. The property was 82% leased as of May 2014. The special servicer indicated they will pursue foreclosure with consensual receivership or a deed-in-lieu of foreclosure.

Moody's estimates an aggregate $14.8 million loss for the specially serviced loans (53% expected loss on average).

Moody's received full year 2013 operating results for 100% of the pool. Moody's weighted average conduit LTV is 62% compared to 80% at Moody's last review. Moody's conduit component excludes loans with structured credit assessments, defeased and CTL loans, and specially serviced and troubled loans. Moody's net cash flow (NCF) reflects a weighted average haircut of 10% to the most recently available net operating income (NOI). Moody's value reflects a weighted average capitalization rate of 9%.

Moody's actual and stressed conduit DSCRs are 1.57X and 1.80X, respectively, compared to 1.39X and 1.29X at the last review. Moody's actual DSCR is based on Moody's NCF and the loan's actual debt service. Moody's stressed DSCR is based on Moody's NCF and a 9.25% stress rate the agency applied to the loan balance.

The top three conduit loans represent 21% of the pool balance. The largest loan is the Great American Plaza Building A-1 Loan ($3.4 million -- 8.4% of the pool), which is secured by a 26,000 SF office building located in Las Vegas, Nevada. The property was 100% leased as of December 2013. The largest tenant, representing 79% of the net rentable area (NRA), has a scheduled lease expiration in 2016. The loan passed its anticipated repayment date in May 2014. Moody's LTV and stressed DSCR are 65% and 1.51X, respectively, compared to 60% and 1.61X at the last review.

The second largest loan is the Manakin Trade Center Loan ($2.9 million -- 7.2% of the pool), which is secured by a flex office property located in Richmond, Virginia. The property was 90% leased as of February 2014. The loan is currently on the watchlist due to potential roll over risk. One tenant leasing, 30% of the NRA, is month to month while another tenant leasing 50% of the NRA has a scheduled lease expiration in 2016. Moody's LTV and stressed DSCR are 83% and 1.17X, respectively, compared to 79% and 1.23X at the last review.

The third largest loan is the Broad Trace Apartments Loan ($2.1 million -- 5.1% of the pool), which is secured by a 48-unit multifamily property located 15 miles east of Columbia in Sumter, South Carolina. The property was 100% leased as of March 2014. Moody's LTV and stressed DSCR are 80% and 1.22X, respectively, compared to 88% and 1.11X at the last review.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions of the disclosure form.

Moody's did not receive or take into account a third-party assessment on the due diligence performed regarding the underlying assets or financial instruments related to the monitoring of this transaction in the past six months.

The analysis includes an assessment of collateral characteristics and performance to determine the expected collateral loss or a range of expected collateral losses or cash flows to the rated instruments. As a second step, Moody's estimates expected collateral losses or cash flows using a quantitative tool that takes into account credit enhancement, loss allocation and other structural features, to derive the expected loss for each rated instrument.

Moody's did not use any stress scenario simulations in its analysis.

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Benjamin Abrams
Associate Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Sandra Ruffin
VP - Senior Credit Officer
Structured Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Affirms Four, Upgrades Three and Downgrades One Class of WBCMT 2004-C14
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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