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Rating Action:

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

08 Dec 2016

Approximately $17.3 Million of Structured Securities Affected

New York, December 08, 2016 -- Moody's Investors Service (Moody's) has affirmed the rating of one interest-only class in LB Commercial Mortgage Trust 1998-C1, Commercial Mortgage Pass-Through Certificates, Series 1998-C1 as follows:

Cl. IO, Affirmed Caa3 (sf); previously on Jan 8, 2016 Downgraded to Caa3 (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that have experienced losses are grossed up for losses and included in the WARF calculation, even if Moody's has withdrawn the rating.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 principal methodology used in this rating was "Moody's Approach to Rating Large Loan and Single Asset/Single Borrower CMBS" published in October 2015. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

DESCRIPTION OF MODELS USED

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 3, compared to 4 at Moody's last review.

Moody's analysis used the excel-based Large Loan Model. 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 and property type. 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 November 18, 2016 distribution date, the transaction's aggregate certificate balance has decreased by 99% to $17.3 million from $1.7 billion at securitization. The Certificates are collateralized by 13 mortgage loans ranging in size from less than 1% to 44% of the pool. Six loans, representing 20% of the pool have defeased and are secured by US Government securities.

Two loans, representing 67% 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 one loans have been liquidated from the pool, resulting in an aggregate realized loss of $53.4 million (43% loss severity on average). No loans are currently in special servicing and Moody's did not identify any troubled loans.

Moody's received full year 2015 and partial year 2016 operating results for 100% of the pool. Moody's weighted average conduit LTV is 37% compared to 36% 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 10.6% to the most recently available net operating income (NOI). Moody's value reflects a weighted average capitalization rate of 9.9%.

Moody's actual and stressed conduit DSCRs are 1.48X and 4.68X, respectively, compared to 1.63X and 5.01X 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 loans represent 74% of the pool balance. The largest loan is the Imperial Palms Apartments Loan ($7.6 million -- 44.0% of the pool), which is secured by a 638-unit senior rental community located in Largo, Florida. The property was 94% leased as of June 2016 compared to 93% at last review. The property performance is stable and the loan benefits from amortization. Moody's LTV and stressed DSCR are 39% and 2.52X, respectively, compared to 41% and 2.40X at the last review.

The second largest loan is the 1526 Charles Boulevard Loan ($4.0 million -- 23.2% 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 June 2016, the property was 97% occupied and remains unchanged since last review. The loan is fully amortizing and matures in December 2023. Moody's LTV and stressed DSCR are 51% and 1.89X, respectively, compared to 68% and 1.44X at the last review.

The third largest loan is the Perimeter Station Shopping Center Loan ($1.1 million -- 6.9% of the pool), which is secured by a 83,500 square foot (SF) anchored retail property located in the Chamblee/Dunwoody submarket of Atlanta, GA. The property is 100% leased, the same as at last review. Major tenants at the property include Barnes & Noble and the Container Store. The loan matures in November 2017 and has amortized 90% since securitization. Moody's LTV and stressed DSCR are 6% and greater than 4.00X, respectively, compared to 10% and greater than 4.00X at 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.

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 credit rating action on the support provider and in relation to each particular credit 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 credit rating action, and whose ratings may change as a result of this credit 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.

Tulay Sangiray
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

Keith Banhazl
Associate Managing Director
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

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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MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​
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