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Rating Action:

Moody's affirms seven classes of MSBAM 2016-C29

06 Jun 2019

Approximately $603.6 million of structured securities affected

New York, June 06, 2019 -- Moody's Investors Service, ("Moody's") has affirmed the ratings on seven classes in Morgan Stanley Bank of America Merrill Lynch Trust 2016-C29, Commercial Mortgage Pass-Through Certificates, Series 2016-C29, as follows:

Cl. A-1, Affirmed Aaa (sf); previously on Apr 12, 2018 Affirmed Aaa (sf)

Cl. A-2, Affirmed Aaa (sf); previously on Apr 12, 2018 Affirmed Aaa (sf)

Cl. A-SB, Affirmed Aaa (sf); previously on Apr 12, 2018 Affirmed Aaa (sf)

Cl. A-3, Affirmed Aaa (sf); previously on Apr 12, 2018 Affirmed Aaa (sf)

Cl. A-4, Affirmed Aaa (sf); previously on Apr 12, 2018 Affirmed Aaa (sf)

Cl. A-S, Affirmed Aa1 (sf); previously on Apr 12, 2018 Affirmed Aa1 (sf)

Cl. X-A*, Affirmed Aaa (sf); previously on Apr 12, 2018 Affirmed Aaa (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, Cl. X-A, was affirmed based on the credit quality of the referenced classes.

Moody's rating action reflects a base expected loss of 5.0% of the current pooled balance, compared to 4.8% at Moody's last review. Moody's base expected loss plus realized losses is now 4.9% of the original pooled balance, compared to 4.7% 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 these ratings, except the interest-only class, was "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in July 2017. The methodologies used in rating interest only classes 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 class is 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 May 17, 2019 distribution date, the transaction's aggregate certificate balance has decreased by 2.2% to $791.8 million from $809.5 million at securitization. The certificates are collateralized by 69 mortgage loans ranging in size from less than 1% to 7.1% of the pool, with the top ten loans (excluding defeasance) constituting 41.4% of the pool. One loan, constituting 5.9% of the pool, has an investment-grade structured credit assessment. One loan, constituting 1.0% 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 37, compared to 38 at Moody's last review.

Five loans, constituting 6.3% 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.

No loans have been liquidated from the pool. One loan, the Brazie Industrial Portfolio Loan ($7.7 million -- 1.0% of the pool), is currently in special servicing. The loan is is secured by a portfolio of two industrial locations. The first property, San Rafael, is an 85,588 SF industrial facility of two contiguous buildings located in Gresham, OR. The property is made of 75,558 SF warehouse area and 10,000 SF two-floor office area. The second property, Yamhill, is an 28,940 SF industrial facility located in Portland, OR. The property was originally owner-occupied but Brooklyn Guild leased it in 2016. The loan entered into special servicing in October of 2018 due to foreclosure in relation to a mechanics lien on the San Rafael property. The combined property was 85% leased as of November 2019, compared to 100% at securitization and the loan is paid through its March 2019 payment date.

Moody's has also assumed a high default probability for one poorly performing loan, constituting 0.6% of the pool.

Moody's received full year 2018 operating results for 97% of the pool, and partial year 2019 operating results for 24% of the pool (excluding specially serviced and defeased loans). Moody's weighted average conduit LTV is 113%, 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 19.0% to the most recently available net operating income (NOI). Moody's value reflects a weighted average capitalization rate of 10.0%.

Moody's actual and stressed conduit DSCRs are 1.50X and 0.98X, respectively, compared to 1.48X and 0.96X 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 Penn Square Mall Loan ($46.6 million -- 5.9% of the pool), which represents a pari-passu portion of a $206.5 million senior mortgage loan. The loan was also structured with additional financing in the form of a $103.5 million B-note that was included in the MSC 2016-PSQ transaction. The loan is secured by a class A, super-regional mall located in Oklahoma City, Oklahoma. Penn Square Mall contains four anchors comprised of Dillard's Women's, Macy's, Dillard's Men's, Children's and Home, and JC Penney. The collateral anchors only include the two Dillard's spaces. As of December 2018, the property was 98% leased, essentially the same as in September 2017. The property is subject to a ground lease that expires in September 2060. Moody's structured credit assessment and stressed DSCR are aaa (sca.pd) and 1.65X, respectively.

The top three conduit loans represent 17.2% of the pool balance. The largest loan is the Grove City Premium Outlets Loan ($56.0 million -- 7.1% of the pool), which represents a pari-passu portion of a $140.0 million senior mortgage loan. The loan is secured by the borrowers fee simple interest in a 531,200 square feet (SF) open-air outlet shopping center located in Grove City, Pennsylvania. The collateral was originally built in 1994, renovated in 2014, and is comprised of seven, single-story, multi-tenanted open-aired buildings and 2,931 surface parking spaces. As of December 2018, the property was 85% leased, compared to 89% in September 2017 and 93% in December 2016. The loan is interest only for its entire term and Moody's LTV and stressed DSCR are 98% and 1.10X, respectively, the same as at Moody's last review.

The second largest loan is the 300 Four Falls Loan ($50.0 million -- 6.3% of the pool), which represents a pari-passu portion of a $70.0 million senior mortgage loan. The loan is secured by the borrower's fee simple interest in a Class A, seven-story office building and a six-level parking garage located in West Conshohocken, Pennsylvania. The property is situated approximately 15 miles northwest of downtown Philadelphia and within a mile of both Interstates 76 and 476. As of December 2018 rent roll, the property was 90% leased, compared to 88% in September 2017 and 98% in April 2016. Property performance has declined since securitization as a result of lower rental revenues. The loan is interest only for its entire term and Moody's LTV and stressed DSCR are 127% and 0.81X, respectively, compared to 122% and 0.84X at Moody's last review.

The third largest loan is the Green Valley Crossing Loan ($30.0 million -- 3.8% of the pool), which is secured by a grocery anchored retail center located in Henderson, Nevada. The property was built between 2010 and 2016. The two anchor tenants include Sprouts Farmers Market (22% of NRA; lease expiration June 2029) and Burkes Outlet (18% of NRA; lease expiration January 2027). As of October 2018 rent roll, the property is 96.5% leased, compared to 96.3% in 2016. The loan has 1.5 years remaining of its initial 5-year interest only period and then amortizes on a 360-month schedule. Moody's LTV and stressed DSCR are 137% and 0.75X, respectively, the same as at Moody's 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 or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt 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.

Suzanna Sava
Vice President - Senior 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 - Sr 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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