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By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

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Rating Action:

Moody's Affirms One Interest-Only Class of LBCMT 1998-C1

14 Jan 2015

Approximately $40.5 Million of Notional Structured Securities Affected

New York, January 14, 2015 -- Moody's Investors Service (Moody's) has affirmed the rating of one interest-only class in LB Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 1998-C1 as follows:

Cl. IO, Affirmed Caa2 (sf); previously on Jan 30, 2014 Affirmed Caa2 (sf)

RATINGS RATIONALE

The rating of the IO class, Class IO, was affirmed based on the credit performance (or the weighted average rating factor or WARF) of its referenced classes The IO class is the only outstanding Moody's-rated class in this transaction.

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

The rating of an IO class is based on the credit performance of its referenced classes. An IO class may be upgraded based on a lower weighted average rating factor or WARF due to an overall improvement in the credit quality of its reference classes. An IO class may be downgraded based on a higher WARF due to a decline in the credit quality of its reference classes, paydowns of higher quality reference classes or non-payment of interest. Classes that have paid off through loan paydowns or amortization are not included in the WARF calculation. Classes that have experienced losses are grossed up for losses and included in the WARF calculation, even if Moody's has withdrawn the rating.

METHODOLOGY UNDERLYING THE RATING ACTION

The methodologies used in this rating were "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in December 2014, 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.

DESCRIPTION OF MODELS USED

Moody's review used the excel-based CMBS Conduit Model v3.0, which it uses for both conduit and fusion transactions. Credit enhancement levels for conduit loans 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). Moody's fuses the conduit results with the results of its analysis of investment grade structured credit assessed loans and any conduit loan that represents 10% or greater of the current pool balance.

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 8, compared to 10 at Moody's last review.

When the Herf falls below 20, Moody's uses the excel-based Large Loan Model v 8.7 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 December 18, 2014 distribution date, the transaction's aggregate certificate balance has decreased by 98% to $40.5 million from $1.7 billion at securitization. The Certificates are collateralized by 19 mortgage loans ranging in size from less than 1% to 21% of the pool, with the top ten loans (excluding defeasance) representing 81% of the pool. Five loans, representing 13% of the pool have defeased and are secured by US Government securities.

Two loans, representing 19% of the pool, are on the master servicer's watchlist. The watchlist includes loans which meet certain portfolio review guidelines established as part of the CRE Finance Council (CREFC) monthly reporting package. As part of our ongoing monitoring of a transaction, Moody's reviews the watchlist to assess which loans have material issues that could impact performance.

Twenty loans have been liquidated from the pool, resulting in an aggregate realized loss of $53.4 million (35% loss severity on average). One loan, representing 11% of the pool, is in special servicing. The specially serviced loan is the Bradley Industrial Park Loan ($4.6 million -- 11.4% of the pool), which is secured by nine industrial / warehouse buildings totaling 587,000 square feet (SF) located in Blauvelt, New York. The loan transferred to special servicing in August 2014 due to the borrower's failure to pay real estate taxes since September 2012. The fully amortizing loan matures in December 2017. Moody's anticipates minimal loss on the loan.

Moody's received full year 2013 and full or partial year 2014 operating results for 100% of the pool. Moody's weighted average conduit LTV is 39% compared to 40% 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 12.6% to the most recently available net operating income (NOI). Moody's value reflects a weighted average capitalization rate of 9.7%.

Moody's actual and stressed conduit DSCRs are 1.44X and 3.72X, respectively, compared to 1.44X and 3.21X at the last review. Moody's actual DSCR is based on Moody's net cash flow (NCF) and the loan's actual debt service. Moody's stressed DSCR is based on Moody's NCF and a 9.25% stressed rate applied to the loan balance.

The top three performing conduit loans represent 41% of the pool balance. The largest loan is the Imperial Palms Apartments Loan ($8.4 million -- 20.8% of the pool), which is secured by a 638-unit senior rental community located in Largo, Florida. As of December 2013, the property was 95% leased compared to 93% at last review. The property is stable and the loan benefits from amortization. Moody's LTV and stressed DSCR are 44% and 2.22X, respectively, compared to 46% and 2.13X at the last review.

The second largest loan is the 1526 Charles Boulevard Loan ($4.8 million -- 11.9% of the pool), which is secured by a 144-unit (528 bed) student housing complex located in Greenville, North Carolina. All of the property's floor plans consists of either three or four bedrooms units. As of September 2014, the property was 96% leased compared to 93% at last review. The loan is fully amortizing and matures in December 2023. Moody's LTV and stressed DSCR are 62% and 1.57X, respectively, compared to 60% and 1.61X at the last review.

The third largest loan is the Food For Less Grocery Store Loan ($3.4 million -- 8.5% of the pool), which is secured by a 54,000 SF single tenant retail property located in El Cajon, California. The property is fully leased to Food For Less, a subsidiary of Kroger, Inc., through September 2017. The loan matures in November 2017. Moody's performed a lit-dark analysis to account for single tenant risk. Moody's LTV and stressed DSCR are 52% and 1.96X, respectively.

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.

Stephanie Sun
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 One Interest-Only Class of LBCMT 1998-C1
No Related Data.
© 2021 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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