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Rating Action:

Moody's affirms six and downgrades two classes of COMM 2005-LP5

09 Nov 2018

Approximately $73.9 million of structured securities affected

New York, November 09, 2018 -- Moody's Investors Service, ("Moody's") has affirmed the ratings on six classes and downgraded the ratings on two classes in COMM 2005-LP5 Commercial Mortgage Pass-Through Certificates as follows:

Cl. F, Downgraded to B3 (sf); previously on Oct 12, 2017 Downgraded to B1 (sf)

Cl. G, Downgraded to Ca (sf); previously on Oct 12, 2017 Downgraded to Caa1 (sf)

Cl. H, Affirmed C (sf); previously on Oct 12, 2017 Downgraded to C (sf)

Cl. J, Affirmed C (sf); previously on Oct 12, 2017 Affirmed C (sf)

Cl. K, Affirmed C (sf); previously on Oct 12, 2017 Affirmed C (sf)

Cl. L, Affirmed C (sf); previously on Oct 12, 2017 Affirmed C (sf)

Cl. M, Affirmed C (sf); previously on Oct 12, 2017 Affirmed C (sf)

Cl. X-C, Affirmed C (sf); previously on Oct 12, 2017 Affirmed C (sf)

RATINGS RATIONALE

The ratings on five P&I classes were affirmed because the ratings are consistent with Moody's expected loss plus realized losses.

The ratings on two P&I classes, Cl. F and Cl. G, were downgraded due to an increase in expected losses from the loan in special servicing. The specially serviced loan, Lakeside Mall, represents 84% of the pool balance and is already real estate owned ("REO").

The rating on the IO class, Cl. X-C, was affirmed based on the credit quality of its referenced classes.

Moody's rating action reflects a base expected loss of 78.9% of the current pooled balance, compared to 69.3% at Moody's last review. Moody's base expected loss plus realized losses is now 5.2% of the original pooled balance, the same as 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 COMM 2005-LP5 Commercial Mortgage Pass-Through Certificates, Cl. F, Cl. G, Cl. H, Cl. J, Cl. K, Cl. L and Cl. M was "Moody's Approach to Rating Large Loan and Single Asset/Single Borrower CMBS" published in July 2017. The methodologies used in rating COMM 2005-LP5 Commercial Mortgage Pass-Through Certificates, Cl. X-C were "Moody's Approach to Rating Large Loan and Single Asset/Single Borrower CMBS" published in July 2017 and "Moody's Approach to Rating Structured Finance Interest-Only (IO) Securities" published in June 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

Moody's analysis incorporated a loss and recovery approach in rating the P&I classes in this deal since 84% of the pool is in special servicing. In this approach, Moody's determines a probability of default for each specially serviced and troubled loan that it expects will generate a loss and estimates a loss given default based on a review of broker's opinions of value (if available), other information from the special servicer, available market data and Moody's internal data. The loss given default for each loan also takes into consideration repayment of servicer advances to date, estimated future advances and closing costs. Translating the probability of default and loss given default into an expected loss estimate, Moody's then applies the aggregate loss from specially serviced to the most junior class(es) and the recovery as a pay down of principal to the most senior class(es).

DEAL PERFORMANCE

As of the October 10, 2018 distribution date, the transaction's aggregate certificate balance has decreased by 96% to $73.9 million from $1.70 billion at securitization. The certificates are collateralized by 12 mortgage loans ranging in size from less than 1% to 84% of the pool. One loan, constituting less than 1% 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 one, compared to a Herf of two at Moody's last review.

Four loans, constituting 2% 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.

Nineteen loans have been liquidated from the pool, resulting in or contributing to an aggregate realized loss of $30.8 million (for an average loss severity of 14%). One loan, constituting 84% of the pool, is currently in special servicing. The specially serviced loan is the Lakeside Mall Loan ($61.7 million -- 83.5% of the pool), which represents a pari-passu portion of a $123.5 million senior mortgage loan. The loan transferred to special servicing in May 2016 per the borrower's request, as the loan failed to pay off at its June 2016 maturity date. The deed in lieu of foreclosure closed on June 30, 2017 and the asset is now REO. The loan is secured by a 643,000 square foot (SF) portion of a 1.5 million SF regional mall located in Sterling Heights, Michigan. The mall's anchors include JC Penney, Macy's, Lord & Taylor and Macy's Mens & Home, as well as a now vacant former Sears anchor space. Macy's Mens & Home is the only anchor tenant that is part of the collateral. As of March 2017, the collateral was 82% leased. The property faces significant competition from three competing retail properties in the area. Moody's anticipates a significant loss on this loan.

As of the October 10, 2018 remittance statement cumulative interest shortfalls were $2.6 million on the rated classes. Moody's anticipates interest shortfalls will continue because of the exposure to specially serviced loans and/or modified loans. Interest shortfalls are caused by special servicing fees, including workout and liquidation fees, appraisal entitlement reductions (ASERs), loan modifications and extraordinary trust expenses.

The top three conduit loans represent 12% of the pool balance. The largest loan is the 30 East 65th Street Loan ($6.0 million -- 8.1% of the pool), which is secured by a 64-unit multifamily cooperative building, located on 65th Street and Madison Avenue in Manhattan. The building is located one block from the Central Park zoo. Moody's LTV is 19%.

The second largest loan is the Pacific American Fish Company Loan ($1.8 million -- 2.4% of the pool), which is secured by a 106,000 square foot (SF) industrial building located in Vernon, California. The building's sole tenant, Pacific American Fish Co., has a lease expiration date in March 2020. The loan is a fully amortizing loan and has amortized 84% since securitization. Due to the single tenant exposure, Moody's value incorporates a lit / dark analysis. Moody's LTV is 10%.

The third largest loan is the Hunters Chase Apartments Loan ($1.4 million -- 1.9% of the pool), which is secured by a 112-unit multifamily property located in Thomasville, Georgia. Property performance has been stable and the loan benefits from amortization. The loan has amortized 20% since securitization and Moody's LTV and stressed DSCR are 42% and 2.13X, respectively,

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.

Christopher Bergman
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
Vice President - Senior Analyst
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.
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