Approximately $16.1 Million of Structured Securities Affected
New York, March 22, 2018 -- Moody's Investors Service, ("Moody's") has
upgraded the rating on one class and affirmed the ratings on three classes
in GMAC Commercial Mortgage Securities, Inc. Series 2003-C3,
Commercial Mortgage Pass-Through Certificates, Series 2003-C3
as follows:
Cl. J, Affirmed Aaa (sf); previously on Mar 31,
2017 Affirmed Aaa (sf)
Cl. K, Upgraded to A2 (sf); previously on Mar 31,
2017 Upgraded to Baa1 (sf)
Cl. L, Affirmed Ca (sf); previously on Mar 31,
2017 Affirmed Ca (sf)
Cl. X-1, Affirmed C (sf); previously on Jun 9,
2017 Downgraded to C (sf)
RATINGS RATIONALE
The rating on the Class K was upgraded based primarily on an increase
in credit support resulting from loans' amortization. The
deal has paid down approximately 8% since Moody's last review.
The rating on the Class J was 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 transaction's Herfindahl
Index (Herf), are within acceptable ranges. The rating on
Class L was affirmed because the ratings are consistent with Moody's expected
loss plus realized losses. Class L has already experienced a 16%
realized loss as a result of previously liquidated loans.
The rating on the IO class, Class X-1, was affirmed
based on the credit quality of its referenced classes.
Moody's does not anticipate losses from the remaining collateral in the
current environment. However, over the remaining life of
the transaction, losses may emerge from macro stresses to the environment
and changes in collateral performance. Our ratings reflect the
potential for future losses under varying levels of stress. Moody's
base expected loss plus realized losses is now 3.2% of the
original pooled balance, unchanged from 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 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 rating GMAC Commercial Mortgage Securities,
Inc. Series 2003-C3, Cl. J, Cl.
K, and Cl. L was " Moody's Approach to Rating Large Loan
and Single Asset/Single Borrower CMBS" published in July 2017.
The methodologies used in rating GMAC Commercial Mortgage Securities,
Inc. Series 2003-C3, Cl. X-1 were "Moody's
Approach to Rating Structured Finance Interest-Only (IO) Securities"
published in June 2017 and "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 these methodologies.
DEAL PERFORMANCE
As of the March 12, 2018 distribution date, the transaction's
aggregate pooled certificate balance has decreased by 99% to $16.1
million from $1.33 billion at securitization. The
certificates are collateralized by five remaining mortgage loans.
Two loans, constituting 46% of the pool, have defeased
and are secured by US government securities.
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 2,
the same as at the last review.
Eight loans have been liquidated from the pool, resulting in an
aggregate realized loss of $43 million (for an average loss severity
of 28%). There are currently no loans in special servicing.
One loan, constituting 5.4% of the pool, is
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.
The three remaining non-defeased loans represent 54% of
the pool balance. The largest loan is the Shaw's Lewiston loan
($6.9 million -- 43.1% of the pool),
which is secured by a grocery-anchored retail center in Lewiston,
Maine. The property is 100% leased to Shaw's Supermarket.
The tenant's lease runs until February 2024. The loan is fully
amortizing and has paid down over 50% since securitization.
The loan term and the sole tenant's lease are co-terminus.
Due to the single tenant exposure, Moody's value utilized a lit/dark
analysis. Moody's LTV and stressed DSCR are 69% and 1.49X,
respectively, compared to 68% and 1.50X at the last
review.
The second largest loan is the Walgreen Meridian loan ($945,311
-- 5.9% of the pool), which is secured by a Walgreens
store located in Meridian, Mississippi. The tenant's lease
runs until June 2028. The loan is fully amortizing and has paid
down over 60% since securitization. Due to the single tenant
exposure, Moody's value utilized a lit/dark analysis. Moody's
LTV and stressed DSCR are 34% and 2.62X, respectively,
compared to 35% and 2.55X at the last review.
The third largest loan is the Walgreens Hattiesburg loan ($867,185
-- 5.4% of the pool), which is secured
by a Walgreens store located in Hattiesburg, Mississippi.
The loan is fully amortizing and has paid down over 60% since securitization.
The tenant's first termination option is in August 2023, which coincides
with the loan's maturity date. Due to the single tenant exposure,
Moody's value utilized a lit/dark analysis. Moody's LTV and stressed
DSCR are 26% and 3.43X, respectively, compared
to 27% and 3.30X 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.
Dariusz Surmacz
Vice President - Senior Analyst
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
Matthew Halpern
Vice President - Senior Analyst
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
