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Rating Action:

Moody's affirms seven classes of COMM 2015-CCRE25

30 Sep 2019

Approximately $818.8 million of structured securities affected

New York, September 30, 2019 -- Moody's Investors Service, ("Moody's") has affirmed the ratings on seven classes in COMM 2015-CCRE25 Mortgage Trust as follows:

Cl. A-1, Affirmed Aaa (sf); previously on Aug 2, 2018 Affirmed Aaa (sf)

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

Cl. A-3, Affirmed Aaa (sf); previously on Aug 2, 2018 Affirmed Aaa (sf)

Cl. A-4, Affirmed Aaa (sf); previously on Aug 2, 2018 Affirmed Aaa (sf)

Cl. A-M, Affirmed Aa2 (sf); previously on Aug 2, 2018 Affirmed Aa2 (sf)

Cl. A-SB, Affirmed Aaa (sf); previously on Aug 2, 2018 Affirmed Aaa (sf)

Cl. X-A*, Affirmed Aa1 (sf); previously on Aug 2, 2018 Affirmed Aa1 (sf)

* Reflects Interest Only Classes

RATINGS RATIONALE

The ratings on six 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 IO class was affirmed based on the credit quality of the referenced classes.

Moody's rating action reflects a base expected loss of 7.8% of the current pooled balance, compared to 6.8% at Moody's last review. Moody's base expected loss plus realized losses is now 7.5% 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 interest-only class was "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in July 2017. The methodologies used in rating interest-only class were "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in July 2017 and "Moody's Approach to Rating Structured Finance Interest-Only (IO) Securities" published in February 2019. Please see the list of ratings at the top of this announcement to identify which classes are interest-only (indicated by the *). Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

DEAL PERFORMANCE

As of the September 12, 2019 distribution date, the transaction's aggregate certificate balance has decreased by 3% to $1.09 billion from $1.13 billion at securitization. The certificates are collateralized by 84 mortgage loans ranging in size from less than 1% to 11% of the pool, with the top ten loans (excluding defeasance) constituting 41% of the pool. Two loans, constituting 7.0% of the pool, have investment-grade structured credit assessments. Three loans, constituting 2.5% 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 32, compared to 34 at Moody's last review.

Fourteen loans, constituting 9% 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.

There have been no loans liquidated from the pool. Four loans, constituting 10% of the pool, are currently in special servicing. The largest specially serviced loan is the Shopko Industrial Portfolio ($49.3 million -- 4.5% of the pool), which is secured by a portfolio of three distribution facilities totaling 1,376,000 square feet (SF). The three facilities include the Omaha Distribution Center (approximately 535,000 SF) located in Omaha, NE; the De Pere Distribution Center (approximately 494,000 SF) located in De Pere, WI; and the Boise Distribution Center (approximately 347,000 SF) in Boise, ID. The three distribution facilities were the former regional distribution centers for ShopKo Stores, Inc., which filed for bankruptcy in January 2019. The loan transferred to special servicing in April 2019 due to imminent default. The former sole tenant (Shopko) vacated the properties and made their last rent payments in May 2019. Since then, the Boise location has been fully leased to a new tenant and there is a prospective tenant interested in the Omaha location. The special servicer is also working with the borrower to modify the loan documents in order to allow for partial release of individual properties from the portfolio.

The second largest specially serviced loan is Monarch 815 at East Tennessee State ($31.4 million -- 2.9% of the pool), which is secured by a 176-unit, 576-bed student housing development located in Johnson City, TN. The property is located adjacent to the campus of East Tennessee State University ("ETSU"). Community amenities at the property include a resort-style pool, cabanas, private yoga studio, workout studio, Starbuck's coffee bar, internet cafe, a dog park and free high-speed WiFi. The loan transferred to special servicing in June 2018 due to payment default. As of July 2019, the property was 65% leased, compared to 73% in December 2018 and unchanged from June 2018 when it was 65% leased. As of July 2019, the property is 55% pre-leased for the fall semester. Several upgrades were performed to the property including roof replacement, hallway flooring common hallway painting, a new shuttle bus, a package delivery system and new pool furniture.

The third largest specially serviced loan is Square 95 ($23.8 million -- 2.2% of the pool), which is secured by a shadow anchored retail property located in Woodbridge VA, adjacent to the Potomac Mills Mall and approximately 20 miles southwest of Washington D.C. As of August 2019, the property was 49% occupied by Floor & Decor of America, unchanged from June 2018. The remaining 51% of the space was previously occupied by Gander Mountain until late 2017 when the company entered bankruptcy and closed their stores. The loan transferred to special servicing in February 2018 for payment default and became REO in June 2018. The special servicer is working with prospective tenants to lease up the vacant space.

The last specially serviced loan is secured by a suburban office building located in Jackson, MS which had negative NOI in 2018 due to low occupancy. Moody's has also assumed a high default probability for two poorly performing loans, an office building in Davenport, IA and an unanchored retail center in Mission Viejo, CA, constituting a combined 1.2% of the pool, and has estimated an aggregate loss of $45.4 million (a 37% expected loss) from these specially serviced and troubled loans.

Moody's received full year 2017 operating results for 99% of the pool, and full or partial year 2018 operating results for 88% of the pool (excluding specially serviced and defeased loans). Moody's weighted average conduit LTV is 117%, compared to 116% 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 9.9%.

Moody's actual and stressed conduit DSCRs are 1.36X and 0.93X, respectively, compared to 1.38X and 0.93X 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 largest loan with a structured credit assessment is the Pearlridge Center ($48.0 million -- 4.4% of the pool), which represents a pari-passu portion of a fixed rate mortgage loan with an aggregate balance of $225 million. The loan is secured by a super-regional mall located in Aiea, HI. The property is the second largest shopping center (largest enclosed) in Hawaii at approximately 1.1 million SF, with 903,692 SF as the loan's collateral. The largest tenants include Sears, Macy's, Bed Bath and Beyond and Pearlridge Movie Theaters. In 2017 the sponsors embarked on a $33 million renovation to expand dining and retail options which as of early 2019 was nearing completion. As of December 2018, the property was 93% leased compared to 95% in December 2017 and 94% in April 2015. Moody's structured credit assessment is baa1 (sca.pd).

The other loan with a structured credit assessment is Scottsdale Quarter ($28.0 million -- 2.6% of the pool), which represents a pari-passu portion of a fixed rate mortgage loan with an aggregate balance of $165 million. The loan is secured by a 541,971 SF mixed-use retail and office center in Scottsdale, AZ. Approximately $1.9 million has been invested in the property since 2012, including painting, landscaping upgrades, lighting and decor. The property was developed in two phases, with Phase I opening in March 2009 and Phase II opening in October 2010. The property underwent Phase III of construction in 2015 that featured new residential, office, hotel and retail square footage, which is not part of the collateral. As of December 2018, the property was 91% leased, compared to 96% in December 2017 and at securitization. Moody's structured credit assessment is a3 (sca.pd).

The top three conduit loans represent 18.8% of the pool balance. The largest loan is the Heartland Industrial Portfolio ($120.0 million -- 11.0% of the pool), which represents a pari-passu portion of a fixed rate mortgage loan with an aggregate balance of $250 million. The loan is secured by a portfolio of 22 Class-A warehouses and distribution facilities. The properties are located in regional markets spanning across IN, IL, KY, TN, NC, SC and OH. There is no single tenant exposure as the properties are leased to a diverse tenant base in various industries. As of June 2019, the portfolio was 94% leased, compared to 95% in March 2018 and 97% at securitization. Moody's LTV and stressed DSCR are 124% and 0.80X, respectively, the same as at last review.

The second largest loan is the Courtyard Miami Downtown ($48.7 million -- 4.5% of the pool), which is secured by a 233-guestroom, full-service hotel located within the Brickell neighborhood of downtown Miami, FL. Hotel improvements are comprised of a 13-story hotel tower and a 6-story parking garage built in 1975 and renovated in 2012. Guest amenities include a business center, fitness center, roof-top pool, meeting space, 380-space valet parking (third-party managed) and the "Bistro Cafe" serving breakfast and dinner. The property operates under a franchise agreement with Marriott International, Inc. through December 13, 2027. As of May 2018, trailing twelve month occupancy averaged 87% with ADR of $172 and RevPAR of $150. The property exceeded its competitive set in terms of RevPAR & ADR, respectively. Moody's LTV and stressed DSCR are 127% and 0.94X, respectively, compared to 130% and 0.92X at last review.

The third largest loan is the Sheraton Raleigh ($35.8 million -- 3.3% of the pool), which is secured by a 353-guestroom hotel located in Raleigh, NC, less than half a mile south of the central business district. The property is also encumbered with a $4.85 million mezzanine loan. Performance has been stable with growing revenues, stemming primarily from rooms revenue while F&B revenue has remained stable. Although revenue has grown since securitization, general/unallocated expenses have increased by almost 25% over the same period. As of July 2019, trailing twelve month occupancy averaged 71% with ADR of $150 and RevPAR of $107. Moody's LTV and stressed DSCR are 130% and 0.90X, respectively, compared to 132% and 0.88X at 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, 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.

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.

Fred Kasimov
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

No Related Data.
© 2019 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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