Approximately $926 million of structured securities affected
New York, November 05, 2020 -- Moody's Investors Service, ("Moody's") has
affirmed the ratings on eight classes and downgraded the rating on one
class in COMM 2014-UBS5 Mortgage Trust, Commercial Mortgage
Pass-Through Certificates as follows:
Cl. A-2, Affirmed Aaa (sf); previously on Dec
11, 2019 Affirmed Aaa (sf)
Cl. A-3, Affirmed Aaa (sf); previously on Dec
11, 2019 Affirmed Aaa (sf)
Cl. A-4, Affirmed Aaa (sf); previously on Dec
11, 2019 Affirmed Aaa (sf)
Cl. A-M, Affirmed Aa1 (sf); previously on Dec
11, 2019 Affirmed Aa1 (sf)
Cl. A-SB, Affirmed Aaa (sf); previously on Dec
11, 2019 Affirmed Aaa (sf)
Cl. B, Affirmed Aa3 (sf); previously on Dec 11,
2019 Affirmed Aa3 (sf)
Cl. C, Downgraded to Baa1 (sf); previously on Dec 11,
2019 Affirmed A3 (sf)
Cl. PEZ**, Affirmed A1 (sf); previously on Dec
11, 2019 Affirmed A1 (sf)
Cl. X-B-1*, Affirmed Aa3 (sf); previously
on Dec 11, 2019 Affirmed Aa3 (sf)
* Reflects interest-only classes
** Reflects exchangeable classes
RATINGS RATIONALE
The ratings on six principal and interest (P&I) classes 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 transaction's Herfindahl Index (Herf), are within
acceptable ranges.
The rating on one P&I class, Cl. C, was downgraded
due a decline in pool performance and higher anticipated losses driven
primarily by the increase from specially serviced and troubled loans.
As of the October 2020 remittance statement, specially serviced
loans account for 22% of the pool and troubled loans account for
9% of the pool. Furthermore, there is a high exposure
to hotel and retail properties at 27% and 16% of the total
pool, respectively. Of the two property types, 76%
are currently in special servicing or on the watchlist.
The rating on the interest-only (IO) class, Class X-B-1,
was affirmed based on the credit quality of its referenced class.
The rating on the exchangeable class, Class PEZ, was affirmed
due to the credit quality of the referenced exchangeable classes.
The coronavirus outbreak, the government measures put in place to
contain it, and the weak global economic outlook continue to disrupt
economies and credit markets across sectors and regions. Our analysis
has considered the effect on the performance of commercial real estate
from the current weak US economic activity and a gradual recovery for
the coming months. Although an economic recovery is underway,
it is tenuous and its continuation will be closely tied to containment
of the virus. As a result, the degree of uncertainty around
our forecasts is unusually high. Stress on commercial real estate
properties will be most directly stemming from declines in hotel occupancies
(particularly related to conference or other group attendance) and declines
in foot traffic and sales for non-essential items at retail properties.
We regard the coronavirus outbreak as a social risk under our ESG framework,
given the substantial implications for public health and safety.
Moody's rating action reflects a base expected loss of 12.2%
of the current pooled balance, compared to 8.1% at
Moody's last review. Moody's base expected loss plus realized
losses is now 9.8% of the original pooled balance,
compared to 6.6% at 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 all classes except exchangeable
classes and interest-only classes was "Approach to Rating US and
Canadian Conduit/Fusion CMBS" published in September 2020 and available
at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1244778.
The principal methodology used in rating exchangeable classes was "Moody's
Approach to Rating Repackaged Securities" published in June 2020 and available
at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1230078.
The methodologies used in rating interest-only classes were "Approach
to Rating US and Canadian Conduit/Fusion CMBS" published in September
2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1244778
and "Moody's Approach to Rating Structured Finance Interest-Only
(IO) Securities" published in February 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1111179.
Please see the list of ratings at the top of this announcement to identify
which classes are interest-only (indicated by the *) and exchangeable
classes (indicated by the **). Alternatively, please
see the Rating Methodologies page on www.moodys.com for
a copy of these methodologies.
DEAL PERFORMANCE
As of the October 13, 2020 distribution date, the transaction's
aggregate certificate balance has decreased by 20.0% to
$1.1 billion from $1.4 billion at securitization.
The certificates are collateralized by 61 mortgage loans ranging in size
from less than 1% to 10.6% of the pool, with
the top ten loans (excluding defeasance) constituting 50.4%
of the pool. Six loans, constituting 5.4% 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 24,
compared to 25 at Moody's last review.
As of the October 2020 remittance report, loans representing 67%
were current or within their grace period on their debt service payments,
17% were beyond their grace period but less than 30 days delinquent,
8% were between 60 -- 89 days delinquent, and 2%
were over 90 days delinquent.
Ten loans, constituting 35.4% of the pool, are
on the master servicer's watchlist, of which four loans,
representing 19.9% of the pool, indicate the borrower
has requested relief in relation to coronavirus impact on the property.
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.
No loans have been liquidated from the pool and 12 loans, constituting
21.6% of the pool, are currently in special servicing.
Four of the specially serviced loans, representing 7.7%
of the pool, have transferred to special servicing since March 2020.
The largest specially serviced loan is the 6100 Wilshire Loan ($57.6
million -- 5.1% of the pool), which is secured
by a 213,556 square foot (SF), 16-story, Class
A office building located in the Miracle Mile District of Los Angeles,
California. The property was built in 1986 and renovated in 2010.
The property features floor-to-ceiling windows and 399 parking
spaces within a 5-level subterranean parking structure.
The loan was transferred to special servicing in October 2019 for imminent
non-monetary default. A cash sweep was triggered due to
the largest tenant, CBS Broadcasting Inc. (21% of
net rentable area (NRA)), not providing a renewal notice within
12 months of its lease expiration in April 2020 and the borrower not being
in compliance with cash management requirements. As of June 2020,
the property was 82% occupied compared to 94% in June 2019.
A forbearance agreement was executed in June 2020 and the loan is less
than less than 30 days delinquent for the October 2020 payment.
Moody's does not anticipate a loss on this loan.
The second largest specially serviced loan is the Ridgmar Mall Loan ($30.3
million -- 2.7% of the pool), which is secured
by a 396,955 SF portion of a 1.3 million SF regional mall
located in Fort Worth, Texas. The asset was also encumbered
with $12.6 million of mezzanine debt at securitization.
The five non-collateral anchors at securitization included Dillard's,
J.C. Penney, Macy's, Sears and Neiman Marcus.
Since origination, the Dillard's was converted to a clearance center
and Macy's, Sears, and Neiman Marcus have all vacated.
J.C. Penny is currently not on the closure list.
The largest collateral tenants at the property include Rave Motion Pictures
(15.5% of NRA; lease expiration December 2023) and
Seaquest Interactive Aquarium (6.7% of NRA; lease expiration
October 2027). The loan transferred to special servicing in October
2017 for imminent monetary default and property performance has continued
to decline from securitization due to lower rental revenues. As
of March 2020, the total mall occupancy was 47%, compared
to 81% in March 2019 and 76% in March 2018. The borrower
requested payment relief in April 2020 due to the coronavirus outbreak
and is currently in maturity default. The loan is past due for
the April 2020 payment. The loan is being dual-tracked on
potential settlement discussions and enforcement of lender's right.
The third largest specially serviced loan is the Harwood Center Loan ($28.5
million -- 2.5% of the pool), which represents
a pari-passu portion of a $86.0 million mortgage
loan. The loan is secured by a fee and leasehold interest in an
approximately 724,000 SF, Class A, office building and
a contiguous nine-story parking garage located in the central business
district (CBD) of Dallas, Texas. The property comprises of
four parcels, of which three parcels totaling approximately 38,000
SF are subject to ground leases with expirations in 2077. As of
March 2020, the property was 69% occupied, compared
to 91% in December 2019. The decrease in occupancy is mainly
due to the reduction of space by the largest tenant, Omnicom Group,
in conjunction with their lease renewal through September 2030.
The loan was transferred to special servicing in May 2020 for imminent
monetary default. The borrower indicated an inability to fund the
tenant improvement obligations that would trigger certain tenant offset
rights. The lender issued a default notice and discussions are
taking place with the borrower pursuant to a pre-negotiation agreement.
The loan is past due for the August 2020 payment.
The remaining nine specially serviced loans are secured by a mix of property
types.
Moody's has also assumed a high default probability for two poorly
performing loans secured by hotel properties, constituting 9.2%
of the pool. The first troubled loan, Canyon Ranch Portfolio
(6.5% of the pool), is further discussed below.
The second troubled loan, Breakwater Hotel (2.7% of
the pool), is secured by a 99-room full-service hotel
located in Miami Beach, Florida. The loan was placed on the
watchlist since February 2019 and has experienced a declining trend in
net operating income since securitization. Moody's has estimated
an aggregate loss of $98.5 million (a 39.4%
expected loss on average) for the troubled loans and eight of the specially
serviced loans.
Moody's received full year 2019 operating results for 100% of the
pool, and partial year 2020 operating results for 61% of
the pool (excluding specially serviced and defeased loans). Moody's
weighted average conduit LTV is 107%, compared to 101%
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 13.7%
to the most recently available net operating income (NOI). Moody's
value reflects a weighted average capitalization rate of 10.1%.
Moody's actual and stressed conduit DSCRs are 1.63X and 1.06X,
respectively, compared to 1.74X and 1.12X 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 22.7% of the pool
balance. The largest loan is the Loews Miami Beach Hotel Loan ($120.0
million -- 10.6% of the pool), which represents
a pari-passu portion of $300.0 million mortgage loan.
The loan is secured by a 790-room, full-service,
beachfront hotel located in Miami Beach, Florida. The property
consists of two oceanfront buildings, an 18-story main tower
with 687 rooms and a six-story tower with 103 rooms, and
houses one of the largest hotel meeting facilities in the South Beach
area. The property was built in 1998 and underwent an approximately
$50 million renovation that was completed in early 2017.
Property performance improved significantly in 2018 and 2019 with the
NOI DSCR above 3.50X for both years. The loan was placed
on the watchlist in June 2020, and the borrower requested payment
relief in relation to the coronavirus outbreak. A side letter agreement
was executed which allows for the suspension of monthly furniture,
fixtures and equipment (FF&E) reserve payments for the May,
June and July 2020, with repayment of the deferred payments from
August 2020 through April 2021 into the reserve account. The loan
is interest-only for the full term and is beyond their grace period
but less than 30-days delinquent for the October 2020 payment.
Moody's LTV and stressed DSCR are 105% and 1.03X,
respectively, compared to 92% and 1.17X at the last
review.
The second largest loan is the Canyon Ranch Portfolio Loan ($73.7
million -- 6.5% of the pool), which represents
a pari-passu portion of $147.4 million mortgage loan.
The loan is secured by two full-service destination resort spa
properties located in Lenox, Massachusetts and Tucson, Arizona.
The two resorts, identified as The Canyon Ranch - Tucson
Property and The Canyon Ranch - Lenox Property, contain a
total of 277 guestrooms. The portfolio has experienced a decline
in NOI since securitization largely due to an increase in expenses.
The trailing twelve-month NOI through June 2020, which includes
the months impacted by the coronavirus outbreak, decreased significantly
to $3.2 million compared to $16.0 million
at year-end 2019 and $22.3 million at year-end
2015. The loan was placed on the watchlist in May 2020 and the
borrower subsequently requested relief. Relief was provided in
the form of a consent agreement which allows for the reserve funds to
cover loan payments for the April through August 2020. In addition,
relief was also provided in the form of a side letter which allows for
the suspension of monthly FF&E reserve payments for the May through
July 2020 and tax and insurance payments for the April through May 2020.
The borrower is expected to repay the reserves by December 2020.
The loan was interest-only for 60 months and has amortized 1.8%
since securitization. The loan is current through the October 2020
payment. Moody's has identified this as a troubled loan.
The third largest loan is the Summit Rancho Bernardo Loan ($63.1
million -- 5.6% of the pool), which is secured
by a five-story, 196,734 SF, Class A office property
located within the Rancho San Bernardo master-planned community
in San Diego, California. The asset was also encumbered with
$10.0 million of mezzanine debt at securitization.
The property was formerly 100% leased to Nokia, a subsidiary
of Microsoft Corporation, through August 2020. The loan was
placed on the watchlist in May 2017 when Nokia elected to exercise its
early-termination rights in 2017 and pay a $13.3
million termination fee. As of March 2020, the property has
been fully leased to Apple, Inc., and rent commencement
was expected to begin in September 2020 with a lease expiration in January
2028. The loan was interest-only for 60 months and has amortized
1.5% since securitization. The loan is current through
the October 2020 payment. Moody's has removed this as a troubled
loan and applied a lit/dark value into our analysis. Moody's LTV
and stressed DSCR are 144% and 0.81X, respectively.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and
sensitivity analysis, see the sections Methodology Assumptions and
Sensitivity to Assumptions in the disclosure form. Moody's
Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
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, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security 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.
The ratings have been disclosed to the rated entity or its designated
agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody's Policy
for Designating and Assigning Unsolicited Credit Ratings available on
its website www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.
At least one ESG consideration was material to the credit rating action(s)
announced and described above.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the EU and is endorsed
by Moody's Deutschland GmbH, An der Welle 5, Frankfurt
am Main 60322, Germany, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that issued the credit rating is available on www.moodys.com.
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.
Amy Wang
Associate Lead 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
Romina Padhi
VP - Senior Credit Officer
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
