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Rating Action:

Moody's Assigns Definitive Ratings to Five CMBS Classes of Aventura Mall Trust 2018-AVM

29 Jun 2018

$750.0 million of Structured Securities Affected

New York, June 29, 2018 -- Moody's Investors Service, ("Moody's") has assigned definitive ratings to five classes of CMBS securities, issued by Aventura Mall Trust 2018-AVM, Commercial Mortgage Pass-Through Certificates, Series 2018-AVM:

Cl. A, Definitive Rating Assigned Aaa (sf)

Cl. B, Definitive Rating Assigned Aa3 (sf)

Cl. C, Definitive Rating Assigned A3 (sf)

Cl. D, Definitive Rating Assigned Baa2 (sf)

Cl. HRR, Definitive Rating Assigned Ba1 (sf)

Note: Moody's previously assigned a provisional rating to Class X-A of (P) Aaa (sf), described in the prior press release, dated June 18, 2018. Subsequent to the release of the provisional ratings for this transaction, Class X-A was eliminated and will not be offered.

RATINGS RATIONALE

The certificates are collateralized by a single loan secured by the borrower's fee simple interest in 1.2 million SF of the 2.2 million SF super-regional mall known as the Aventura Mall ("the Property") located in Aventura, FL, approximately 17 miles north of Miami. The loan is a ten-year, fixed-rate, interest-only, first lien mortgage loan with an original and outstanding principal balance of $1,750,000,000. The ratings are based on the collateral and the structure of the transaction.

More specifically, the trust assets primarily consist of eight promissory notes, including four senior notes and four junior notes, which combined have an aggregate principal balance of $750,000,000 as of the cut-off date.

The Property is a nationally recognized retail asset, it is the largest mall in the state of Florida and one of the most productive malls in the United States. The mall contains five anchors comprised of Macy's, Bloomingdale's, Macy's Men's and Home, J. C. Penney and Nordstrom. The collateral for the loan totals 1,217,508 SF and includes the J. C. Penney anchor space and the pad sites ground leased to Macy's, Bloomingdale's, Macy's Men's and Home, and Nordstrom. The Property benefits from a large mix of luxury and mass market tenants that appeal to a wide variety of shoppers. Notable national tenants in occupancy include a 24-screen AMC Theatres, Cheesecake Factory, Apple, Zara, Forever 21, H&M, Victoria Secret, Banana Republic, Abercrombie & Fitch as well as luxury tenants such Burberry, Louis Vuitton, Gucci, Fendi, Cartier, Tiffany & Co., and Henri Bendel.

The sponsor recently completed an approximately $230.0 million expansion of the Property which added a new 226,641 SF two level wing on the east side of the mall. The new wing is anchored by a two-story Zara, a two-story Topshop / Topman and a 20,218 SF Apple cube store at the expansion entrance. As the Apple store is still completing construction, the retailer remains open at their present 6,300 SF store within the mall. The new store is expected to open in summer 2019. The expansion wing is currently 72% leased with much of the vacant space proximate to the new Apple store and that the Sponsor intends to hold off on leasing until the Apple store nears completion to maximize achievable rents.

As of February 2018 and including recently executed leases, the Property (excluding non-collateral space) was 92.8% occupied, which includes the recently opened and not fully leased expansion wing, and has averaged 97.9% occupancy from 2010 through 2017.

Moody's approach to rating this transaction involved an application of Moody's Approach to Rating Large Loan and Single Asset/Single Borrower CMBS. The rating approach for securities backed by a single loan compares the credit risk inherent in the underlying collateral with the credit protection offered by the structure. The structure's credit enhancement is quantified by the maximum deterioration in property value that the securities are able to withstand under various stress scenarios without causing an increase in the expected loss for various rating levels. In assigning single borrower ratings, we also consider a range of qualitative issues as well as the transaction's structural and legal aspects.

The credit risk of loans is determined primarily by two factors: 1) Moody's assessment of the probability of default, which is largely driven by each loan's DSCR, and 2) Moody's assessment of the severity of loss upon a default, which is largely driven by each loan's LTV ratio.

The first mortgage balance of $1,750,000,000 represents a Moody's LTV of 85.3%. The Moody's first mortgage DSCR is 1.99x and Moody's first mortgage DSCR at a 9.25% stressed constant is 0.89x.

Notable strengths of the transaction include the asset's trophy qualities, diversified shoppers base, sales productivity, inline sales, recent expansion, and strong sponsorship. Offsetting these strengths are the lack of asset diversification, interest-only mortgage loan profile, decline in recent sales, potential future competition, and credit negative legal features.

The principal methodology used in these ratings was "Moody's Approach to Rating Large Loan and Single Asset/Single Borrower CMBS" published in July 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

Moody's approach for single borrower and large loan multi-borrower transactions evaluates credit enhancement levels based on an aggregation of adjusted loan level proceeds derived from our Moody's loan level LTV ratios. Major adjustments to determining proceeds include leverage, loan structure, and property type. These aggregated proceeds are then further adjusted for any pooling benefits associated with loan level diversity, other concentrations and correlations.

These ratings: (a) are based solely on information in the public domain and/or information communicated to Moody's by the issuer at the date it was prepared and such information has not been independently verified by Moody's; (b) must be construed solely as a statement of opinion and not a statement of fact or an offer, invitation, inducement or recommendation to purchase, sell or hold any securities or otherwise act in relation to the issuer or any other entity or in connection with any other matter. Moody's does not guarantee or make any representation or warranty as to the correctness of any information, rating or communication relating to the issuer. Moody's shall not be liable in contract, tort, statutory duty or otherwise to the issuer or any other third party for any loss, injury or cost caused to the issuer or any other third party, in whole or in part, including by any negligence (but excluding fraud, dishonesty and/or willful misconduct or any other type of liability that by law cannot be excluded) on the part of, or any contingency beyond the control of Moody's, or any of its employees or agents, including any losses arising from or in connection with the procurement, compilation, analysis, interpretation, communication, dissemination, or delivery of any information or rating relating to the issuer.

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 may indicate that the collateral's credit quality is stronger or weaker than Moody's had previously anticipated. Factors that may cause an upgrade of the ratings include significant loan paydowns or amortization, an increase in the pool's share of defeasance or overall improved pool performance. Factors that may cause a downgrade of the ratings include a decline in the overall performance of the pool, loan concentration, increased expected losses from specially serviced and troubled loans or interest shortfalls.

Moody's ratings address only the credit risks associated with the transaction. Other non-credit risks have not been addressed and may have a significant effect on yield to investors.

The ratings do not represent any assessment of (i) the likelihood or frequency of prepayment on the mortgage loans, (ii) the allocation of net aggregate prepayment interest shortfalls, (iii) whether or to what extent prepayment premiums might be received, or (iv) in the case of any class of interest-only certificates, the likelihood that the holders thereof might not fully recover their investment in the event of a rapid rate of prepayment of the mortgage loans.

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.

Further information on the representations and warranties and enforcement mechanisms available to investors are available on http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1131625.

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 quantitative analysis entails an evaluation of scenarios that stress factors contributing to sensitivity of ratings and take into account the likelihood of severe collateral losses or impaired cash flows. Moody's weights the impact on the rated instruments based on its assumptions of the likelihood of the events in such scenarios occurring.

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.

Blair Coulson
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Joseph Baksic
Associate Managing Director
Structured Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
© 2018 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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