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Rating Action:

Moody's affirms eight classes of GSMS 2016-GS3

26 May 2020

Approximately $871.7 million of structured securities affected

New York, May 26, 2020 -- Moody's Investors Service, ("Moody's") has affirmed the ratings on eight classes in GS Mortgage Securities Trust 2016-GS3 Commercial Mortgage Pass-Through Certificates Series 2016-GS3 as follows:

Cl. A-1, Affirmed Aaa (sf); previously on Sep 20, 2018 Affirmed Aaa (sf)

Cl. A-2, Affirmed Aaa (sf); previously on Sep 20, 2018 Affirmed Aaa (sf)

Cl. A-3, Affirmed Aaa (sf); previously on Sep 20, 2018 Affirmed Aaa (sf)

Cl. A-4, Affirmed Aaa (sf); previously on Sep 20, 2018 Affirmed Aaa (sf)

Cl. A-AB, Affirmed Aaa (sf); previously on Sep 20, 2018 Affirmed Aaa (sf)

Cl. A-S, Affirmed Aa2 (sf); previously on Sep 20, 2018 Affirmed Aa2 (sf)

Cl. B, Affirmed A1 (sf); previously on Sep 20, 2018 Affirmed A1 (sf)

Cl. X-A*, Affirmed Aa1 (sf); previously on Sep 20, 2018 Affirmed Aa1 (sf)

* Reflects interest-only classes

RATINGS RATIONALE

The ratings on the seven 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 the interest-only Class X-A was affirmed based on the credit quality of the referenced classes.

Our analysis has considered the effect of the coronavirus outbreak on the US economy as well as the effects that the announced government measures, put in place to contain the virus, will have on the performance of commercial real estate. 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.

The contraction in economic activity in the second quarter will be severe and the overall recovery in the second half of the year will be gradual. However, there are significant downside risks to our forecasts in the event that the pandemic is not contained and lockdowns have to be reinstated. As a result, the degree of uncertainty around our forecasts is unusually high. 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 6.3% of the current pooled balance, compared to 3.5% at Moody's last review. Moody's base expected loss plus realized losses is now 6.1% of the original pooled balance, compared to 3.5% 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 interest-only classes was "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in May 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1226187. The methodologies used in rating interest-only classes were "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in May 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1226187 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 *). Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

DEAL PERFORMANCE

As of the May 12, 2020 distribution date, the transaction's aggregate pooled certificate balance has decreased by 2.2% to $1.05 billion from $1.07 billion at securitization. The certificates are collateralized by 34 mortgage loans ranging in size from less than 1% to 8.4% of the pool, with the top ten loans (excluding defeasance) constituting 62.3% of the pool. Three loans, constituting 22.0% of the pool, have investment-grade structured credit assessments. One loan, constituting 1.4% of the pool, has defeased and is 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 20, the same as at Moody's last review.

As of the May 2020 remittance report, loans representing 94% were current or within their grace period on their debt service payments and only one loan, representing 1% of the pool, was beyond its grace period but less than 30 days delinquent.

Eighteen loans, constituting 51.2% of the pool, are on the master servicer's watchlist, of which fifteen loans, representing 33.0% 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 two loans, constituting 10.7% of the pool, are currently in special servicing. The largest specially serviced loan is the Hamilton Place Loan ($60.5 million -- 5.8% of the pool), which represents a pari-passu portion of a $99.6 million mortgage loan. The loan is secured by an approximately 391,000 SF component of a 1.2 million SF enclosed, 2-story, regional mall in Chattanooga, Tennessee. The mall is anchored by J.C. Penney, Belk, and Dillard's, none of which are contributed as collateral for the loan. The sponsor, CBL, purchased back a prior non-collateral anchor space (Sears) in 2017 and has been in process of redeveloping the space. As of December 2019, the collateral property was 96% occupied compared to 97% in 2018 and 91% at securitization. The property's 2019 NOI declined approximately 15% from underwritten level due to a combination of lower rental revenue and higher operating expenses. The sponsor reported mall store sales of $418 per square foot in 2019 compared to $406 PSF in 2018. The loan benefits from amortization and has amortized 6.5% since securitization. The loan was transferred to special servicing in May 2020 for imminent monetary default at the borrower's request as a result of the coronavirus outbreak and is currently paid through its April 2020 payment date. The mall re-opened in May after a temporary close in March and April from the coronavirus outbreak.

The second largest specially serviced loan is the Hilton Irvine Loan ($51.7 million -- 4.9% of the pool), which is secured by a 306-room full-service hotel located in Irvine, California and adjacent to the John Wayne International Airport. The property was built in 1985 and renovated in 2016. The loan was transferred to special servicing in April 2020 at the borrower's request as a result of the coronavirus outbreak and is currently paid through its April 2020 payment date. For the year-end 2019 the property's NOI had declined nearly 18% since securitization due to lower revenue and higher operating expenses. The property's demand drivers include the University of California at Irvine and the Anaheim Convention Center.

Moody's has also assumed a high default probability for four poorly performing loans, constituting 8.1% of the pool, which were primarily secured by hotel and retail properties that were already experiencing declines in NOI from underwritten levels prior to the coronavirus outbreak. All four loans are currently on the master servicer's watchlist for a relief request as a result of the coronavirus outbreak. The largest troubled loan is the Embassy Suites Raleigh-Durham Research Triangle Loan ($37.1 million -- 3.5% of the pool), which is secured by a 273-room full-service hotel located in Cary, North Carolina that has experienced declining room and F&B revenue since securitization. The second largest troubled loan is the Residence Inn and SpringHill Suites North Shore Loan ($20.7 million -- 2.0% of the pool), which represents a pari-passu portion of a $64.9 million mortgage loan, secured by two adjacent hotels, a 199-room limited service hotel and a 180-room extended stay hotel located in Pittsburgh, Pennsylvania. The third largest troubled loan is the Lincoln Corners Loan ($17.8 million -- 1.7% of the pool), which is secured by an approximately 180,700 SF retail center located in Harlingen, TX. The largest tenants include Hobby Lobby (30% of NRA), Ross Dress for Less (17% of NRA), Bealls Store (17% of NRA), and PetSmart (11% of NRA).

Moody's received full year 2018 operating results for 97% of the pool, and full or partial year 2019 operating results for 97% of the pool (excluding specially serviced and defeased loans). Moody's weighted average conduit LTV is 119%, compared to 114% 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 21% to the most recently available net operating income (NOI). Moody's value reflects a weighted average capitalization rate of 9.7%.

Moody's actual and stressed conduit DSCRs are 1.62X and 0.89X, respectively, compared to 1.68X and 0.95X 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 loan with a structured credit assessment is the 10 Hudson Yards Loan ($87.5 million -- 8.4% of the pool), which represents a pari-passu portion of a $708.1 million mortgage loan. The asset is also encumbered by $191.9 million of subordinate debt and $300.0 million of mezzanine debt. The loan is secured by a newly constructed, 52-story, mixed-use tower featuring approximately 1.8 million square feet (SF) of office, retail, and storage space. The property is located on the northwest corner of 10th Avenue and 30th Street in New York, New York and is the first tower of the Hudson Yards development to be completed and leased. Amenities at the property include a food hall, event space, an outdoor terrace, and a 230-space parking structure. The five largest tenants at 10 Hudson Yards are Coach, Inc. (30% of net rentable area (NRA)), L'Oreal (22% of NRA), Boston Consulting Group (11% of NRA), SAP America (8% of NRA), and Intersection (4% of NRA). As of December 2019, the property was 100% leased, up from 99% in 2018 and 93% at securitization. The loan is IO through its entire term and Moody's structured credit assessment and stressed DSCR are aa3 (sca.pd) and 1.27X, respectively, the same as at the last review.

The second largest loan with a structured credit assessment is the 540 West Madison Loan ($87.0 million -- 8.3% of the pool), which represents a pari-passu portion of a $162.3 million mortgage loan. The asset is also encumbered by a $54.2 million rake bond, a $108.5 million C-Note, and a $75.0 million mezzanine debt. The loan is secured by a 31-story, Class A office building located in the West Loop submarket of Chicago, Illinois. Since 2018, the largest tenant, Bank of America, increased its space from 32% of NRA to 40% of NRA with a lease expiration in December 2032. As of December 2019, the property was 98% occupied, unchanged from 2018 and compared to 92% at securitization. The loan was placed on the master servicer's watchlist in May 2020 for a relief request as a result of the coronavirus outbreak but remained current as of its May 2020 payment date. Through year-end 2019 the property's performance had improved since securitization due to higher revenues. The loan is interest-only throughout its entire term and Moody's structured credit assessment and stressed DSCR are a3 (sca.pd) and 1.57X, respectively, the same as at the last review.

The third largest loan with a structured credit assessment is the Veritas Multifamily Pool 1 Loan ($55.3 million -- 5.3% of the pool), which represents a pari-passu portion of a $230.3 million mortgage loan. The asset is also encumbered by $249.7 million of subordinate debt and $196.5 million of mezzanine debt. The loan is secured by a portfolio of 61 apartment properties located in various neighborhoods in San Francisco, California. The total portfolio comprises 1,726 multifamily units and 37 retail units totaling approximately 41,160 SF. The top five neighborhoods by unit count are Downtown, Nob Hill, Civic Center, Russian Hill, and Pacific Heights. Since 2012, the portfolio has undergone approximately $32.9 million (about $19,000 per unit) in capital improvements, including approximately $22.7 million on unit renovations and approximately $10.2 million on building upgrades. As of September 2019, the portfolio was 87% occupied, compared to 88% in 2018 and 95% at securitization. The loan is interest-only throughout its entire term and Moody's structured credit assessment and stressed DSCR are aa2 (sca.pd) and 1.54X, respectively, the same as at the last review.

The top three conduit loans represent 20.3% of the pool balance. The largest loan is the U.S. Industrial Portfolio Loan ($83.5 million -- 8.0% of the pool), which represents a pari-passu portion of a $302.1 million mortgage loan. The loan is secured by a portfolio of 39 warehouse/distribution and office/flex properties totaling 6.3 million SF and located throughout 17 states. All but one of the properties are occupied by a single-tenant. One property, located in Compton, CA, is currently multi-tenanted after the prior single tenant from securitization vacated the building. As of September 2019, the portfolio was 99% occupied, compared to 96% in 2018 and 100% at securitization. The loan is currently on the watchlist for deferred maintenance issues at three properties. The loan has amortized 1.8% since securitization and Moody's LTV and stressed DSCR are 127% and 0.83X, respectively, compared to 128% and 0.83X at the last review.

The second largest loan is The Falls Loan ($70.0 million -- 6.7% of the pool), which represents a pari-passu portion of a $150.0 million mortgage loan. The loan is secured by an approximately 839,500 SF open-air, regional mall in Miami, Florida, approximately 13 miles to the southwest of the Miami central business district (CBD). The mall is anchored by Macy's (29% of NRA) with a lease expiration in July 2027. The loan was placed on the watchlist in April 2020 due to the departure of a prior anchor, Bloomingdales, who had accounted for 27% of NRA. Per the borrower, a lease was executed with Life Time Fitness (a fitness and athletics workout facility) to backfill a portion of the vacancy. As of December 2019, the property was 96% leased and 69% occupied, excluding the Bloomingdale space, compared to 97% leased in 2018 and 98% at securitization. The property's 2019 NOI has declined nearly 8% since securitization due to lower rental revenue, however, the actual NOI DSCR was 3.24X. The loan is interest-only through its entire term and Moody's LTV and stressed DSCR are 95% and 1.03X, respectively, compared to 77% and 1.23X at the last review.

The third largest loan is the Panorama Corporate Center Loan ($58.5 million -- 5.6% of the pool), which represents a pari-passu portion of a $133.0 million mortgage loan. The loan is secured by six-building, Class A, office campus located in Centennial, Colorado. The largest tenant, Comcast, accounts for 48% of NRA with lease expirations in 2025 for a third of the space and in 2029 for the remaining space. The second largest tenant, United Launch Alliance (ULA), accounts for 33% of NRA with a lease expiration in 2021. As of December 2019, the property was 99% occupied, unchanged from 2018 and 93% at securitization. The loan is IO through its entire term and Moody's LTV and stressed DSCR are 115% and 0.87X, respectively, the same as 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.

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

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

No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH  CURRENT OPINIONS. MOODY'S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND  OTHER OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES  ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

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Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy."

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

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