Approximately $819 million of structured securities affected
New York, November 11, 2020 -- Moody's Investors Service, ("Moody's") has
affirmed the ratings on eight classes and downgraded the rating on two
classes in JPMBB Commercial Mortgage Securities Trust, Commercial
Mortgage Pass-Through Certificates, Series 2014-C25
as follows:
Cl. A-4A1, Affirmed Aaa (sf); previously on Sep
21, 2018 Affirmed Aaa (sf)
Cl. A-4A2, Affirmed Aaa (sf); previously on Sep
21, 2018 Affirmed Aaa (sf)
Cl. A-5, Affirmed Aaa (sf); previously on Sep
21, 2018 Affirmed Aaa (sf)
Cl. A-SB, Affirmed Aaa (sf); previously on Sep
21, 2018 Affirmed Aaa (sf)
Cl. A-S, Affirmed Aa1 (sf); previously on Sep
21, 2018 Affirmed Aa1 (sf)
Cl. B, Affirmed Aa3 (sf); previously on Sep 21,
2018 Affirmed Aa3 (sf)
Cl. C, Downgraded to Baa2 (sf); previously on Sep 21,
2018 Affirmed A3 (sf)
Cl. X-A*, Affirmed Aa1 (sf); previously on
Sep 21, 2018 Affirmed Aa1 (sf)
Cl. X-B*, Affirmed Aa3 (sf); previously on
Sep 21, 2018 Affirmed Aa3 (sf)
Cl. EC**, Downgraded to A2 (sf); previously
on Sep 21, 2018 Affirmed A1 (sf)
* Reflects interest-only classes
** Reflects exchangeable classes
RATINGS RATIONALE
The ratings on six P&I classes were affirmed due to their credit support
and 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 Cl. C was downgraded due to a decline in pool performance
as a result of higher anticipated losses from specially serviced and troubled
loans. Nine loans, mostly secured by hotel and retail properties,
are in special servicing making up 11.5% of the pool.
In aggregate, loans secured by retail and hotel properties represent
29% and 10% of the deal, respectively. Furthermore,
the pool has exposure to a Class B mall, Mall at Barnes Crossing
and Market Center Tupelo, representing 6.5% of the
pool.
The ratings on the interest-only (IO) classes were affirmed based
on the credit quality of their referenced classes.
The rating on exchangeable class Cl. EC was downgraded due to the
decline in 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 10.5%
of the current pooled balance, compared to 4.8% at
Moody's last review. Moody's base expected loss plus realized
losses is now 9.0% of the original pooled balance,
compared to 4.6% 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 19, 2020 distribution date, the transaction's
aggregate certificate balance has decreased by 17% to $981
million from $1.18 billion at securitization. The
certificates are collateralized by 58 mortgage loans ranging in size from
less than 1% to 11% of the pool, with the top ten
loans (excluding defeasance) constituting 49% of the pool.
Six loans, constituting 9% 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 23,
the same as at Moody's last review.
As of the October 2020 remittance report, loans representing 82%
were current or within their grace period on their debt service payments,
11% were beyond their grace period but less than 30 days delinquent
and 1% were between 30 -- 59 days delinquent.
Ten loans, constituting 11.6% 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.
Two loans have been liquidated from the pool, resulting in an aggregate
realized loss of $3.2 million (for an average loss severity
of 79%). Nine loans, constituting 11.5%
of the pool, are currently in special servicing. Six of the
specially serviced loans, representing 10% of the pool,
have transferred to special servicing since March 2020.
The largest specially serviced loan is the Hilton Houston Post Oak Loan
($42.8 million -- 4.4% of the pool),
which represents a pari passu portion of a $76.1 million
mortgage loan. The loan is secured by 448 key full-service
hotel located in Houston, Texas, near the Houston Galleria
shopping area. The loan was transferred to special servicing in
May 2020 as a result of performance issues in connection with the coronavirus
pandemic. While property performance has been stable since 2016,
the performance has been significantly below securitization levels.
The 2019 NOI DSCR was 1.39X, however, it was 34%
below the full year 2015 NOI primarily due to lower revenue per available
room (RevPAR). The master servicer has recognized an appraisal
reduction within this transaction as a result of the reduced appraisal
value reported in September 2020. The loan is last paid through
the April 2020 payment date and the special servicer is currently pursuing
with foreclosure while continuing to negotiate with the borrower.
The second largest specially serviced loan is the Southport Plaza ($25.0
million -- 2.5% of the pool), which is secured
by a four story Class B Office / Flex property located in Staten Island,
New York. The property contains 127,522 square feet (SF)
of office space and 64,558 SF of industrial/flex space. The
property is 82% leased as of March 2020, down from 100%
leased as of December 2018. The second largest tenant, Xerox
Corporation (31% of the NRA), had a lease expiration in October
2020 after extending their initial lease for two years in 2018.
The property transferred to special servicing for monetary default in
June 2020.
The remaining seven specially serviced loans are primarily secured by
hotel and retail properties. Moody's has also assumed a high default
probability for four poorly performing loans, constituting 3.6%
of the pool. The troubled loans each represent 1.1%
or less of the pool and are secured by hotel properties that had already
exhibited declines in performance through year-end 2019.
Moody's estimates an aggregate $42.3 million loss for the
specially serviced and troubled loans (34% expected loss on average).
Moody's received full year 2019 operating results for 99% of the
pool, and partial year 2020 operating results for 89% of
the pool (excluding specially serviced and defeased loans). Moody's
weighted average conduit LTV is 112%, compared to 109%
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 22% 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 1.61X and 0.99X,
respectively, compared to 1.66X and 1.00X 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 24.8% of the pool
balance. The largest loan is the CityPlace Loan ($107.2
million -- 10.9% of the pool), which is secured
by five adjacently located office buildings and one mixed-use office
building located in Creve Coeur, Missouri. Creve Coeur is
located approximately seventeen miles west of the St. Louis central
business district. The collateral is part of a larger 31-acre
campus, which includes 1.2 million square feet (SF) of office
space, retail, and residential buildings. As of December
2019, the property was 94% leased, the same as of June
2018 and compared to 93% as of July 2017. The properties
three largest tenants make up approximately 23% of the NRA and
each have lease expiration dates of 2025 or later. The loan has
amortized 1.5% since securitization after an initial interest
only period. Moody's LTV and stressed DSCR are 122% and
0.84X, respectively, compared to 124% and 0.83X
at the last review.
The second largest loan is the Grapevine Mills Loan ($73.0
million -- 7.4% of the pool), which is secured
by a 1.34 million SF component of a 1.63 million SF super-regional
mall located in Grapevine, Texas. The loan represents a pari-passu
portion of a $268.0 million mortgage loan. The property
is located approximately 10 miles north of Dallas/Fort Worth International
Airport and contains a mix of outlets, traditional retailers and
entertainment related venues. The largest tenants include Fieldhouse
USA, Burlington Coat Factory, Round 1 Bowling and Last Call
by Neiman Marcus. The property also includes a 30-screen
AMC Theatres, Legoland Discovery Center, and an aquarium.
Through year-end 2019 the property had exhibited strong performance
with an in-place NOI DSCR of 3.92X due to higher rental
revenue and the 2019 NOI was 7% higher than in 2016. The
June 2020 year-to-date performance has declined, however,
the in-place NOI DSCR was still 3.62X. The collateral
was 93% leased as of September 2019, compared to 95%
leased as of year-end 2017, and 99% as of year-end
2016. The loan is interest only throughout its entire term and
as remained current through its October 2020 remittance date. Moody's
LTV and stressed DSCR are 75% and 1.38X, respectively,
compared to 71% and 1.38X at the last review.
The third largest loan is the Mall at Barnes Crossing and Market Center
Tupelo Loan ($63.5 million -- 6.5% of
the pool), which is secured by a 569,430 SF collateral portion
of a 670,384 SF single-story regional mall and an adjacent
strip center with 60,327 SF located in Tupelo, Mississippi.
The anchors include a Belk (non-collateral), Belk Home Store,
and JC Penney. A former Sears space (78,600 SF) is now vacant.
Other major tenants include a Dick's Sporting Goods (lease expiration
in January 2022). Barnes & Noble (lease expiration in January
2021) and Cinemark Theater (lease expiration in January 2029).
The theater re-opened in August, after its temporary closure
as a result of the coronavirus pandemic. In-line occupancy
was 87% as of June 2020. Net operating income has been stable
since securitization. The 2019 NOI remained in-line with
2018, however, this was largely due to declines in expenses
as the property's revenue declined 2% year over year. The
property is located in a tertiary market with weak barriers to entry and
weaker than average trade area demographics. The loan has amortized
5% since securitization and as of October remittance statement
was less than 1 month delinquent (paid through September 2020).
Moody's LTV and stressed DSCR are 144% and 0.92X,
respectively, compared to 117% and 0.94X 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 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.
Christopher Bergman
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
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
