Approximately $94 Million of Structured Securities Affected
New York, January 27, 2017 -- Moody's Investors Service has affirmed the ratings on three classes and
downgraded six classes of COMM 2005-LP5 Commercial Mortgage Pass-Through
Certificates as follows:
Cl. E, Affirmed Aaa (sf); previously on Jun 16,
2016 Upgraded to Aaa (sf)
Cl. F, Downgraded to Ba1 (sf); previously on Jun 16,
2016 Affirmed A3 (sf)
Cl. G, Downgraded to Ba3 (sf); previously on Jun 16,
2016 Affirmed Baa2 (sf)
Cl. H, Downgraded to Caa3 (sf); previously on Jun 16,
2016 Downgraded to B2 (sf)
Cl. J, Downgraded to C (sf); previously on Jun 16,
2016 Downgraded to Caa1 (sf)
Cl. K, Downgraded to C (sf); previously on Jun 16,
2016 Downgraded to Caa3 (sf)
Cl. L, Affirmed C (sf); previously on Jun 16,
2016 Downgraded to C (sf)
Cl. M, Affirmed C (sf); previously on Jun 16,
2016 Downgraded to C (sf)
Cl. X-C, Downgraded to Caa2 (sf); previously
on Jun 16, 2016 Downgraded to Caa1 (sf)
RATINGS RATIONALE
The ratings on three P&I classes, Classes E, L and M,
were affirmed because the transaction's key metrics, including Moody's
loan -to-value (LTV) ratio, Moody's stressed debt
service coverage ratio (DSCR) and the transactions Herfindahl Index (HERF),
are within acceptable ranges.
The ratings on five P&I classes, Classes F through K,
were downgraded due to ongoing concerns about current and future interest
shortfalls and losses from specially serviced loans.
The rating on one IO class, Class XC, was downgraded based
on a decline in the credit performance (or the weighted average rating
factor or WARF) of the referenced classes. The deal has paid down
an additional 14% since last review.
Moody's rating action reflects a base expected loss of 57.3%
of the current balance compared to 26.9% at last review.
Moody's base expected plus realized losses totals 4.8%
compared to 3.2% at 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 AN UPGRADE OR DOWNGRADE OF THE RATINGS:
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 principal methodology used in these ratings 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 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 January 10, 2017 distribution date, the transaction's
aggregate certificate balance has decreased by 94% to $97.6
million from $1.7 billion at securitization. The
certificates are collateralized by 16 mortgage loans ranging in size from
less than 1% to 71% of the pool, with the top ten
loans constituting 98% of the pool.
Two loans, constituting 2% 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.
Nineteen loans have been liquidated from the pool, resulting in
an aggregate realized loss of $26.5 million (for an average
loss severity of 12%). The largest specially serviced loan
is the Lakeside Mall Loan ($69.5 million --
71% of the pool), which represents a pari-passu interest
in a $138.9 million senior mortgage loan. The loan
transferred to special servicing in May 2016 per the borrower's (GGP)
request, as the loan failed to pay off at its June 1, 2016
maturity date. The loan is secured by 643,000 square feet
(SF) within a 1.5 million SF regional mall located in Sterling
Heights, Michigan. The mall's anchors include Sears,
JC Penney, Macy's, Lord & Taylor and Macy's Mens &
Home. Macy's Mens and Home is the only anchor tenant that is part
of the collateral. As of November 30, 2016, the total
mall was approximately 93% occupied, while in-line
occupancy was approximately 77%. Inline tenant sales per
square foot on a trailing 12 month basis as of September 2016 were reported
to be $263 compared to $284 for calendar year 2015.
Comparable inline tenant sales over the same time period were $311
on a trailing 12 month basis as of September 2016 compared to $318
as of year-end 2015. Many inline tenants also have lease
maturity dates within the next 18 months.
The second largest loan in special servicing is Meridian Place Apartments
Loan (for $10.0 million -- 10.2% of the
pool), which is secured by a 232-unit Class C+ multifamily
property located 2 miles north of the Tallahassee, Florida central
business district. The loan transferred to special servicing in
September 2010 due to payment default and became REO in January 2012.
As of December 2016, the property was 94% leased, the
same as at last review. The special servicer's strategy is to make
select capex repairs, increase rents and then dispose of the asset
in second half of 2017.
Moody's received full year 2015 operating results for 64% of the
pool, and full or partial year 2016 operating results for 64%
of the pool. Moody's weighted average conduit LTV is 28%,
compared to 31% 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 value reflects a weighted average capitalization rate of 9.7%.
Moody's actual and stressed conduit DSCRs are 3.39X and 4.17X,
respectively, compared to 2.95X and 3.81X 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 11.2% of the pool
balance. The largest loan is the 30 East 65th Street Loan ($6.0
million -- 6.1% of the pool), which is secured
by a 64-unit co-operative building, located on 65th
and Madison Avenue in Manhattan. The building is located one block
from the Central Park zoo. Moody's LTV and stressed DSCR are 19%
and 4.32X, respectively, the same as at last review.
The second largest loan is the Pacific American Fish Company Loan ($3.4
million -- 3.5% of the pool), which
is secured by a 106,000 SF industrial building located in Vernon,
California. The building's sole tenant, Pacific American
Fish Co. lease expires on March 31, 2020. Performance
has remained steady. Due to the single tenant exposure, Moody's
stressed the value of the property utilizing a lit / dark analysis.
Moody's LTV and stressed DSCR are 16% and 5.87X, respectively,
compared to 19% and 5.11X at the last review.
The third largest loan is the Hunters Chase Apartments Loan ($1.5
million -- 1.5% of the pool). The loan
is secured by a 112-unit multifamily property located in Thomasville,
Georgia. As of December 2016, the property was 99%
leased. Moody's LTV and stressed DSCR are 38% and 2.35X,
respectively, compared to 48% and 1.89X 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.
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.
Gregory Reed
VP - Senior Credit Officer
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
