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Rating Action:

Moody's affirms seven classes of JPMDB 2017-C5

09 Oct 2020

Approximately $770 million of structured securities affected

New York, October 09, 2020 -- Moody's Investors Service, ("Moody's") has affirmed the ratings on seven classes in JPMDB Commercial Mortgage Securities Trust 2017-C5, Commercial Mortgage Pass-Through Certificates, Series 2017-C5:

Cl. A-2, Affirmed Aaa (sf); previously on May 10, 2019 Affirmed Aaa (sf)

Cl. A-3, Affirmed Aaa (sf); previously on May 10, 2019 Affirmed Aaa (sf)

Cl. A-4, Affirmed Aaa (sf); previously on May 10, 2019 Affirmed Aaa (sf)

Cl. A-5, Affirmed Aaa (sf); previously on May 10, 2019 Affirmed Aaa (sf)

Cl. A-S, Affirmed Aa3 (sf); previously on May 10, 2019 Affirmed Aa3 (sf)

Cl. A-SB, Affirmed Aaa (sf); previously on May 10, 2019 Affirmed Aaa (sf)

Cl. X-A*, Affirmed Aa1 (sf); previously on May 10, 2019 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 its 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 11.6% of the current pooled balance, compared to 5.9% at Moody's last review. Moody's base expected loss plus realized losses is now 11.0% of the original pooled balance, compared to 5.8% 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 September 2020 and available at https://www.moodys.com/researchdocumentcontentpage.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/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 *). Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

DEAL PERFORMANCE

As of the September 17, 2020 distribution date, the transaction's aggregate certificate balance has decreased by 5% to $989 million from $1.04 billion at securitization. The certificates are collateralized by 33 mortgage loans ranging in size from less than 1% to 8% of the pool, with the top ten loans (excluding defeasance) constituting 56% of the pool. One loan, constituting 6% of the pool, has an investment-grade structured credit assessment.

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, compared to 24 at Moody's last review.

As of the September 2020 remittance report, loans representing 89% were current or within their grace period on their debt service payments and 11% were greater than 90 days delinquent.

Five loans, constituting 16% of the pool, are on the master servicer's watchlist, of which three loans, representing 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.

Five loans, constituting 12% of the pool, are currently in special servicing. Three of the specially serviced loans, representing 4% of the pool, have transferred to special servicing since March 2020.

The largest specially serviced loan is the 229 West 43rd Street Retail Condo Loan ($80 million -- 8.1% of the pool), which represents a pari-passu portion of a $285 million mortgage loan. The loan is secured by the borrower's fee simple interest in a 248,457 square feet (SF) retail property located in the Times Square neighborhood of New York, New York. The property is also encumbered with $85.0 million of mezzanine debt held outside the trust. The property represents six floors of an 18-story, 729,566 SF building that also includes an office condominium on floors 5-16 (which are not part of the collateral). The building is located mid-block between Broadway and 8th avenue with frontage on both West 43rd Street and West 44th Street. The loan transferred to special servicing in December 2019 due to imminent monetary default as a result of tenants vacating or defaulting on their lease payments. National Geographic (24% of the net rentable area (NRA)) was paying reduced rent but is now closed and 60+ days delinquent on rent payments. Gulliver's Gate (20% of the NRA) closed in January 2020, three months after filing for chapter 11 bankruptcy. The senior lender received notice from the mezzanine lenders that the mezzanine loans have been accelerated and posted for foreclosure. Occupancy is currently 52%, down from 100% at securitization. Property taxes have increased since securitization due to the expiration of an ICIP tax abatement. A recent valuation of the property indicates a value which is materially below the loan amount. This loan is interest-only throughout the 10-year loan term. The special servicer is in discussions with the borrower and mezzanine lender in an attempt to develop a resolution strategy.

The second largest specially serviced loan is the Dick's Sporting Goods Portfolio Loan ($12.2 million -- 1.2% of the pool), which is secured by a portfolio of five Dick's Sporting Goods and one PetSmart. Three stores are located in New Hampshire, one in Illinois, one in Kansas and one in Indiana. The loan transferred to special servicing in April 2020 due to imminent monetary default. The borrower failed to make the April payment and then subsequently remitted the loan current and is now requesting a loan modification. The lender will dual track legal remedies and evaluate potential workout strategies while continuing discussions with the borrower.

The third largest specially serviced loan is the Plaza Ashland Loan ($11.9 million -- 1.2% of the pool), which is secured by a 92 unit hotel property located in Ashland, Oregon. The loan transferred to special servicing in April 2020 due to imminent monetary default and is past due for the April 2020 payment. The property relies on local theater related demand generation. The cancellation of the Oregon Shakespeare Festival has resulted in a collapse of room night demand with low occupancies and no change is expected until next year's theater business resumes (city has cancelled the remainder of events through 2020). The borrower is requesting relief and forbearance is in process.

The remaining two specially serviced loans are secured by a hotel property and retail property. The hotel property is located in Richland, Washington and transferred to special servicing in April 2020 due to imminent monetary default resulting from the coronavirus pandemic. The retail property is located in Billings, Montana and transferred to special servicing in August 2019 due to imminent default as a result of a loss of its single tenant. In December 2019, the borrower was able to finalize a lease with a replacement tenant with a rent commencement date in May 2020. Moody's estimates an aggregate $49.2 million loss for the specially serviced loans (45% expected loss on average).

Moody's received full year 2019 operating results for 91% of the pool, and partial year 2020 operating results for 84% of the pool (excluding specially serviced and defeased loans). Moody's weighted average conduit LTV is 121%, compared to 118% 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 23% to the most recently available net operating income (NOI). Moody's value reflects a weighted average capitalization rate of 10%.

Moody's actual and stressed conduit DSCRs are 1.52X and 0.91X, respectively, compared to 1.50X and 0.91X 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 Hilton Hawaiian Village Loan ($62.3 million -- 6.3% of the pool), which represents a pari-passu portion of a $696.6 million first mortgage loan. The property is also encumbered with $578.4 million of subordinate B-notes, for a total debt amount of $1.275 billion. The loan is secured by the borrower's fee and leasehold interest in the Hilton Hawaiian Village property, which is situated on 22 acres along Waikiki Beach in Hawaii. The resort features 2,860 guest rooms spread across five towers, 20 food and beverage outlets, 150,000 SF of indoor and outdoor function space, three conference centers, five swimming pools, a saltwater lagoon, spa grottos, the Mandara Spa and Fitness Center, two chapels and approximately 130,500 SF of leased retail and restaurant space. As of June 2020, the trailing twelve month (TTM) occupancy was 84%. This loan is interest-only throughout the 10-year loan term and remains current on debt service payments. Moody's structured credit assessment and stressed DSCR are aa3 (sca.pd) and 1.80X, respectively, the same as at last review.

The top three conduit loans represent 19% of the pool balance. The largest loan is the 350 Park Avenue Loan ($66.7 million -- 6.7% of the pool), which represents a pari-passu portion of a $296 million senior mortgage loan. The loan is secured by a 30-story, 570,784 SF, Class-A office building located in New York, New York. The property is also encumbered with a $104.0 million B-note. The building is located in the Plaza District submarket in Midtown Manhattan, encompassing the entire western block of Park Avenue between East 51st and East 52nd Streets. The property is comprised of 541,352 SF of Class A office space and 17,144 SF of ground floor retail space. The property was 99% leased as of September 2019, essentially the same since securitization. Ziff Brothers Investments (50% of NRA) has vacated and is subleasing 65% of their space to other tenants. They are continuing to pay rent but will not renew at lease expiration in April 2021. Their departure reduced physical occupancy to 49% at the time of their departure. Excluding the sublet space, physical occupancy is now up to 67% as a number of tenants that were subleasing have signed direct leases. This loan is interest-only throughout the 10-year loan term. Moody's LTV and stressed DSCR are 92% and 0.94X, respectively, compared to 80% and 1.08X at the last review.

The second largest loan is the Prudential Plaza Loan ($63.9 million -- 6.5% of the pool), which represents a pari-passu portion of a $408.3 million mortgage loan. The loan is secured by the fee interest in two Class A office towers totaling 2.3 million SF located in Chicago's East Loop submarket. One Prudential Plaza is a 41-story 1.3 million SF building that was built in 1955, and most recently renovated in 2014-2015. Two Prudential Plaza is a 64-story, 1 million SF building that was built in 1990. The two towers are connected by a public mezzanine level that contains approximately 60,000 SF of restaurant and retail space. As of June 2020, the property was 89% occupied, unchanged from December 2019 and compared to 87% in December 2018 and 77% at securitization. Performance has improved since securitization due to higher revenues from the increased occupancy. Moody's LTV and stressed DSCR are 135% and 0.74X, respectively, compared to 138% and 0.73X at the last review.

The third largest loan is the Key Center Cleveland Loan ($58.2 million -- 5.9% of the pool), which represents a pari-passu portion of a $255.8 million mortgage loan. The loan is secured by the fee and leasehold interest in a mixed-use office and hotel property located in downtown Cleveland, Ohio. The total property (office and hotel) comprise 2.4 million SF. Collateral for the loan includes (i) a fee simple interest in Class-A, 57-story office building containing 1,369,980 SF, (ii) a full-service Marriott Hotel containing 400 guestrooms, and (iii) a leasehold interest in a 985-space, subterranean parking garage. As of March 2020, the property was 92% leased compared to 91% in 2018 and 80% at securitization. Keybank occupies approximately 35% of the NRA and may reduce up to 103,000 SF or 22% of its space in three installments. The Marriott Cleveland Downtown represents approximately 35% of property EGI as of 2019. The loan began to amortize in February 2019 and is based on a 25-year schedule. Moody's LTV and stressed DSCR are 112% and 1.00X, respectively, the same as 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 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.

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.
© 2021 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 CREDIT RATINGS AFFILIATES ARE THEIR 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 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 APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S 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 $5,000,000. 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.”

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