Approximately $574.3 million of structured securities affected
New York, November 25, 2020 -- Moody's Investors Service, ("Moody's") has
affirmed the ratings on seven classes in CSAIL 2018-C14 Commercial
Mortgage Trust, Commercial Mortgage Pass Through Certificates,
Series 2018-C14 as follows:
Cl. A-1, Affirmed Aaa (sf); previously on Nov
29, 2018 Definitive Rating Assigned Aaa (sf)
Cl. A-2, Affirmed Aaa (sf); previously on Nov
29, 2018 Definitive Rating Assigned Aaa (sf)
Cl. A-3, Affirmed Aaa (sf); previously on Nov
29, 2018 Definitive Rating Assigned Aaa (sf)
Cl. A-4, Affirmed Aaa (sf); previously on Nov
29, 2018 Definitive Rating Assigned Aaa (sf)
Cl. A-S, Affirmed Aa3 (sf); previously on Nov
29, 2018 Definitive Rating Assigned Aa3 (sf)
Cl. A-SB, Affirmed Aaa (sf); previously on Nov
29, 2018 Definitive Rating Assigned Aaa (sf)
Cl. X-A*, Affirmed Aa1 (sf); previously on
Nov 29, 2018 Definitive Rating Assigned Aa1 (sf)
*Reflects Interest-Only Class
RATINGS RATIONALE
The ratings on six principal and interest (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 the interest-only (IO) class, Class X-A,
was affirmed based on the credit quality of the referenced 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 9.2%
of the current pooled balance and Moody's base expected loss plus realized
losses is now 9.2% of the original pooled balance.
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 September 2020 and available at https://www.moodys.com/viewresearchdoc.aspx?docid=PBS_1244778.
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/viewresearchdoc.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/viewresearchdoc.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 November 18, 2020 distribution date, the transaction's
aggregate certificate balance has decreased by 0.5% to $766.3
million from $770.2 million at securitization. The
certificates are collateralized by 44 mortgage loans ranging in size from
less than 1% to 9.1% of the pool, with the
top ten loans (excluding defeasance) constituting 54.7%
of the pool. Two loans, constituting 6.9% of
the pool, have investment-grade structured credit assessments.
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,
unchanged from securitization.
As of the November 2020 remittance report, loans representing 90%
were current or within their grace period on their debt service payments,
less than 1% were between 30 -- 59 days delinquent,
and 9% were 90 days over more delinquent.
Six loans, constituting 13.1% of the pool, are
on the master servicer's watchlist, of which one loan,
representing 0.7% 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 five loans, constituting
10.9% of the pool, are currently in special servicing.
All of the specially serviced loans have transferred to special servicing
since March 2020.
The largest specially serviced loan is the Sheraton Grand Nashville Downtown
Loan ($30.0 million -- 3.9% of the pool),
which represents a pari-passu portion of a $160.0
million mortgage loan. The loan is secured by a 482-room,
full-service hotel located in downtown Nashville, Tennessee.
A Skye meeting room and ballroom is located on the top floor and was renovated
in early 2017. Hotel amenities include a restaurant, lounge,
indoor pool, fitness center, business center and approximately
23,554 square feet (SF) of meeting space. The loan was transferred
to special servicing in June 2020 for payment default . The property
has been impacted by the coronavirus pandemic and the borrower submitted
a modification request that is under review. In addition,
the servicer is in process of establishing a lockbox to trap revenue and
the borrower is marketing the property for sale via loan assumption.
An updated July 2020 appraisal reported a decrease in property value to
$183.0 million compared to $276.5 million
in 2018, however, due to the reported value this did not result
in an appraisal reduction. The loan is past due for its April 2020
payment.
The second largest specially serviced loan is the Holiday Inn FiDi Loan
($25.0 million -- 3.3% of the pool),
which represents a pari-passu portion of a $87.0
million mortgage loan. The property is also encumbered by $50.0
million of subordinate debt. The loan is secured by a 50-story,
492-room, full-service hotel located in the Financial
District in New York, New York. Hotel amenities include a
fitness center, business center, and dining options at St.
George Tavern. The loan was transferred to special servicing in
May 2020 for imminent default at the borrower's request in relation
to the coronavirus pandemic. The hotel was closed between March
2020 and July 2020 and has since re-opened. The servicer
is dual-tracking the loan for foreclosure while considering the
borrower's request for forbearance. There is currently a
foreclosure moratorium in New York State through January 1, 2021.
An updated August 2020 appraisal reported a decrease in property value
to $138.6 million compared to $233.0 million
in 2018, however, due to the reported value this did not result
in an appraisal reduction. The loan is past due for its May 2020
payment and Moody's does not currently anticipate a loss on this loan.
The third largest specially serviced loan is the Utah Hotel Portfolio
Loan ($14.6 million -- 1.9% of the pool),
which is secured by four hotels located in Kanab, Springdale,
Moab, and Monticello in Utah. The portfolio consists of a
combined 251 rooms and are located in proximity to national parks,
which represents a major demand generator in their respective markets.
The portfolio was transferred to special servicing in July 2020 for imminent
default at the borrower's request in relation to the coronavirus
pandemic. The loan is past due for its April 2020 payment and discussions
are ongoing for a short-term forbearance.
The remaining two specially serviced loans are cross-collateralized
and are secured by a portfolio of retail properties located in South Carolina
and one retail property located in North Carolina. The properties
are all anchored by grocery tenants. The loans were transferred
to special servicing in May 2020 for imminent monetary default at the
borrower's request in relation to the coronavirus pandemic.
The loans have since been brought current and are expected to be returned
to the master servicer. Moody's does not currently anticipate a
loss on these loans.
Moody's has also assumed a high default probability for one poorly
performing loan, constituting 0.7% of the pool.
Moody's has estimated an aggregate loss of $14.2 million
(a 28.4% expected loss on average) for the troubled loan
and two of the specially serviced loans.
The credit risk of loans is determined primarily by two factors:
1) Moody's assessment of the probability of default, which is largely
driven by each loan's DSCR, and 2) Moody's assessment of the severity
of loss upon a default, which is largely driven by each loan's loan-to-value
ratio, referred to as the Moody's LTV or MLTV. As described
in the CMBS methodology used to rate this transaction, we make various
adjustments to the MLTV. We adjust the MLTV for each loan using
a value that reflects capitalization (cap) rates that are between our
sustainable cap rates and market cap rates. We also use an adjusted
loan balance that reflects each loan's amortization profile.
The MLTV reported in this publication reflects the MLTV before the adjustments
described in the methodology.
Moody's received full year 2019 operating results for 96% of the
pool, and partial year 2020 operating results for 87% of
the pool (excluding specially serviced and defeased loans). Moody's
weighted average conduit LTV is 118%, compared to 113%
at securitization. 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 18.8%
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 1.60X and 0.95X,
respectively, compared to 1.65X and 0.99X at securitization.
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 Greystone
Loan ($42.0 million -- 5.5% of the pool),
which represents a pari-passu portion of a $52.0
million mortgage loan. The property is also encumbered by $43.0
million of subordinate debt and $23.0 million of mezzanine
debt. The loan is secured by a 14-story, 363-unit
multifamily located in the Upper West Side of New York, New York.
As of the September 2020 rent roll, the property was 77%
occupied compared to 93% in June 2020 and 100% at year-end
2019. The average rents for leases with start dates after March
2020 have decreased by approximately 10%. The loan is interest-only
through its entire term and is current through its November 2020 payment.
Moody's structured credit assessment and stressed DSCR are baa3 (sca.pd)
and 1.26X, respectively.
The second loan with a structured credit assessment is the 20 Times Square
Loan ($11.0 million -- 1.4% of the pool),
which represents a pari-passu portion of a $265.0
million senior mortgage loan. The property is also encumbered with
$485.0 million of B-note and $150.0
million of mezzanine debt. The loan is secured by the borrower's
fee simple interest in a 16,066 SF parcel of land located along
Seventh Avenue and West 47th Street in Times Square, New York,
NY. The non-collateral improvements above the property are
encumbered with a 99-year ground lease with an initial ground rent
of $29.25 million per annum, subject to a 2.0%
annual increases in years 1- 5 and 2.75% annual increase
thereafter. The non-collateral property consists of 74,820
SF of retail space, 18,000 SF of digital signage on 7th avenue
and the 452-room hotel. While hotel and retail properties
in Times Square have been significantly impacted by the coronavirus pandemic,
the loan benefits from its ground lease priority and in the event of default
of the ground lease, ownership of the improvements would revert
to the borrower (ground lessor) and serve as collateral for the loan.
Moody's structured credit assessment is aaa (sca.pd).
The top three conduit loans represent 25.4% of the pool
balance. The largest loan is the Prudential -- Digital Realty
Portfolio Loan ($70.0 million -- 9.1%
of the pool), which represents a pari-passu portion of a
$212.0 million mortgage loan. The loan is secured
by eight, Tier III, powered shell centers totaling approximately
1.0 million SF located across California, Texas, New
Jersey, and Virginia. As of June 2020, the properties
were 100% leased by four tenants. Cyxtera (46% of
combined SF) leases three of the properties, VADATA, Inc.
(25% of combined SF) leases two of the properties, and Equinix,
LLC (19% of combined SF) leases two of the properties. The
tenants invested their own capital to build out the internal infrastructure
and improvements. The loan is interest-only through its
entire term and is current through its November 2020 payment. Moody's
LTV and stressed DSCR are 98% and 1.10X, respectively,
unchanged from securitization.
The second largest loan is the Georgetown Squared & Seattle Design
Center Loan ($65.0 million -- 8.5% of
the pool), which represents a pari-passu portion of a $91.0
million mortgage loan. The loan is secured by an approximately
430,700 SF office and design center located in Seattle, Washington,
approximately 4.4 mi. south of the Seattle central business
district (CBD). The properties consists of two buildings attached
by a second-floor enclosed glass sky bridge. Georgetown
Squared comprises approximately 277,300 SF of Class A, creative
office space and Seattle Design Center comprises approximately 153,500
SF of design and showroom space, which includes a glass-dome
atrium that is frequently used as event space. As of June 2020,
the properties were 88% occupied compared to 80% at year-end
2019. The largest tenants include Darigold Inc. (10%
of net rentable area (NRA)) with a lease expiration in 2029, R.R.
Donnelley & Sons Company (8% of NRA) with a lease expiration
in 2025, and Association Services of Washington (7% of NRA)
with a lease expiration in 2029. As of November 2020, the
majority of the $17.0 million earnout reserve at securitization
has been released with a balance of approximately $413,300.
The loan is still within its interest-only period of 36 months
and is current through its November 2020 payment. Moody's LTV and
stressed DSCR are 147% and 0.71X, respectively.
The third largest loan is the Continental Towers Loan ($59.5
million -- 7.8% of the pool), which represents
a pari-passu portion of a $84.5 million mortgage
loan. The loan is secured by a 910,717 SF, 3-tower,
Class A office complex located in Meadows, Illinois. The
largest tenant, Cellco Partnership (Verizon) (18% of NRA)
has a lease expiration in 2028. The second largest tenant,
Komatsu America Corporation (Komatsu) (12% of NRA), has a
lease expiration in July 2021. In 2018, Komatsu had provided
a three-year advanced notice confirming they would not renew their
space. The third and fourth largest tenants, Advocate Health
(8% of NRA) and Panasonic (6% of NRA), have lease
expirations in 2025 and 2022, respectively. As of June 2020,
the properties were 74% leased, compared to 86% at
year-end 2019. The decrease in occupancy was largely due
to Ceannate Corporation (8% of NRA) vacating prior to their lease
expiration in 2024. If the Komatsu tenant is excluded, the
occupancy would decrease to 62%. The loan was placed on
the watchlist in August 2020 due to a tax advancement of $2.6
million. The servicer issued a notice in July 2020 and is following
up with the borrower. The loan is interest-only through
its entire term and is current through its November 2020 payment.
Moody's LTV and stressed DSCR are 137% 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
