Approximately $864 million of structured securities affected
New York, July 10, 2020 -- Moody's Investors Service, ("Moody's") has affirmed the ratings
on ten classes, confirmed the rating on one class and downgraded
the ratings on two classes in COMM 2013-CCRE6 Mortgage Trust,
Commercial Mortgage Pass-Through Certificates, Series 2013-CCRE6,
as follows:
Cl. A-3FL, Affirmed Aaa (sf); previously on Dec
13, 2019 Affirmed Aaa (sf)
Cl. A-3FX, Affirmed Aaa (sf); previously on Dec
13, 2019 Affirmed Aaa (sf)
Cl. A-4, Affirmed Aaa (sf); previously on Dec
13, 2019 Affirmed Aaa (sf)
Cl. A-M, Affirmed Aaa (sf); previously on Dec
13, 2019 Affirmed Aaa (sf)
Cl. A-SB, Affirmed Aaa (sf); previously on Dec
13, 2019 Affirmed Aaa (sf)
Cl. B, Affirmed Aa2 (sf); previously on Dec 13,
2019 Affirmed Aa2 (sf)
Cl. C, Affirmed A2 (sf); previously on Dec 13,
2019 Affirmed A2 (sf)
Cl. D, Confirmed at Baa3 (sf); previously on Apr 17,
2020 Baa3 (sf) Placed Under Review for Possible Downgrade
Cl. E, Downgraded to Ba3 (sf); previously on Apr 17,
2020 Ba2 (sf) Placed Under Review for Possible Downgrade
Cl. F, Downgraded to B3 (sf); previously on Apr 17,
2020 B2 (sf) Placed Under Review for Possible Downgrade
Cl. PEZ**, Affirmed Aa3 (sf); previously on
Dec 13, 2019 Affirmed Aa3 (sf)
Cl. X-A*, Affirmed Aaa (sf); previously on
Dec 13, 2019 Affirmed Aaa (sf)
Cl. X-B*, Affirmed A1 (sf); previously on
Dec 13, 2019 Affirmed A1 (sf)
* Reflects interest-only classes
** Reflects exchangeable classes
RATINGS RATIONALE
The ratings on seven P&I classes were affirmed and the ratings on
one P&I class, Cl. D, was confirmed 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 ratings on two P&I classes, Cl. E and Cl.
F, were downgraded due to a decline in pool performance, driven
primarily by the decline in performance of a regional mall, The
Avenues Mall, representing 12.1% of the pool.
The ratings on two interest only (IO) classes were affirmed based on the
credit quality of the referenced classes.
The ratings on one exchangeable class, Cl. PEZ, was
affirmed based on the credit quality of its referenced exchangeable classes.
The actions conclude the review for downgrade initiated on April 17,
2020.
The rapid spread of the coronavirus outbreak, the government measures
put in place to contain it and the deteriorating global economic outlook,
have created a severe and extensive credit shock across sectors,
regions and markets. Our analysis has considered the effect on
the performance of commercial real estate from the collapse in US economic
activity in the second quarter and a gradual recovery in the second half
of the year. However, that outcome depends on whether governments
can reopen their economies while also safeguarding public health and avoiding
a further surge in infections. As a result, the degree of
uncertainty around our forecasts is unusually high. We regard the
coronavirus outbreak as a social risk under our ESG framework, given
the substantial implications for public health and safety. 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.
Moody's rating action reflects a base expected loss of 4.8%
of the current pooled balance, compared to 2.1% at
Moody's last review. Moody's base expected loss plus realized
losses is now 2.9% of the original pooled balance,
compared to 1.4% 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 methodologies used in rating all classes except exchangeable classes
and interest-only classes were "Approach to Rating US and Canadian
Conduit/Fusion CMBS" published in May 2020 and available at https://www.moodys.com/research/Approach-to-Rating-US-and-Canadian-ConduitFusion-CMBS--PBS_1226187
and "Moody's Approach to Rating Large Loan and Single Asset/Single Borrower
CMBS" published in May 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1227875.
The principal methodology used in rating exchangeable classes was "Moody's
Approach to Rating Repackaged Securities" published in June 2020 and available
at https://www.moodys.com/research/Moodys-Approach-to-Rating-Repackaged-Securities--PBS_1230078.
The methodologies used in rating interest-only classes were "Approach
to Rating US and Canadian Conduit/Fusion CMBS" published in May 2020 and
available at https://www.moodys.com/research/Approach-to-Rating-US-and-Canadian-ConduitFusion-CMBS--PBS_1226187,
"Moody's Approach to Rating Large Loan and Single Asset/Single Borrower
CMBS" published in May 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1227875,
and "Moody's Approach to Rating Structured Finance Interest-Only
(IO) Securities" published in February 2019 and available at https://www.moodys.com/research/Moodys-Approach-to-Rating-Structured-Finance-Interest-Only-IO-Securities--PBS_1111179.
Please see the list of ratings at the top of this announcement to identify
which classes are interest-only (indicated by the *) and exchangeable
classes (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 June 12, 2020 distribution date, the transaction's
aggregate certificate balance has decreased by 39% to $908
million from $1.50 billion at securitization. The
certificates are collateralized by 39 mortgage loans ranging in size from
less than 1% to 14.3% of the pool, with the
top ten loans (excluding defeasance) constituting 73.4%
of the pool. Nine loans, constituting 6.6%
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 12,
compared to 13 at Moody's last review.
As of the June 2020 remittance report, loans representing 92.4%
were current or within their grace period on their debt service payments,
5.5% were delinquent at 30 days and 2.1% were
delinquent at 60 days or more.
Nine loans, constituting 43.9% 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.
One loan has been liquidated from the pool, resulting in a minimal
realized loss to the trust. There are currently no loans in special
servicing. However, Moody's has assumed a high default
probability for two poorly performing loans, constituting 4.2%
of the pool, and has estimated an aggregate loss of $10.7
million (28% expected on average) from these troubled loans.
The loans are secured by retail and hotel properties, located in
Yorba Linda, CA and Lubbock, TX, respectively.
Both loans are on the servicer's watchlist.
Moody's received full year 2019 operating results for 93% of the
pool (excluding specially serviced and defeased loans). Moody's
weighted average conduit LTV is 99%, compared to 91%
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 24% 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 1.94X and 1.13X,
respectively, compared to 1.89X and 1.19X 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 top three conduit loans represent 35.6% of the pool
balance. The largest loan is the Federal Center Plaza Loan ($130.0
million -- 14.3% of the pool), which is secured
by two adjacent office buildings totaling 725,000 square feet (SF)
in Washington, DC. The property is well-located between
the US Capitol and Washington Monument, two blocks from two separate
metro stations (Federal Center SW and L'Enfant Plaza). The property
was 95% leased as of March 2020, compared to 87% leased
as of March 2018, compared to 94% as of December 2016.
The property's largest tenants include federal government agencies as
the largest tenants with a significant near term lease rollover risk from
the GSA (Department of State) (42% of the NRA), which has
a lease expiration date in August 2020 and Federal Emergency Management
Agency (48% of the NRA), which has a lease expiration date
in January 2021. A cash flow sweep period is in effect and the
servicer has collected $15 million in this reserve account (the
capped amount of the cash flow sweep). Due to the significant tenant
concentration at the property, Moody's value incorporated a partial
Lit/Dark analysis. The loan is the interest only for the entire
10-year term. Moody's LTV and stressed DSCR are 85%
and 1.21X, respectively.
The second largest loan is The Avenues Loan ($110.0 million
-- 12.1% of the pool), which is secured by an
approximately 599,000 SF retail component of a 1.1 million
SF super-regional mall in Jacksonville, Florida. The
mall is anchored by Dillard's (not part of the collateral),
Belk (not part of the collateral), J.C Penny (not part of
the collateral) and Sears. Sears (121,000 SF) closed its
store in December 2019. The collateral was 80% leased as
of December 2019, compared to 87% as of December 2018.
Inline occupancy was 70% as of June 2019 rent roll, compared
to 81% as of March 2018. Without the Sears tenant,
the current occupancy is 59%. Property performance has deteriorated
since securitization, and the 2019 NOI was 11% lower than
in 2018 and 16% lower from securitization levels primarily due
to declining rental revenues. The loan is interest only for its
entire term and Moody's LTV and stressed DSCR are 128% and 1.01X,
respectively, compared to 101% and 1.10X at the last
review.
The third largest loan is the Paramount Plaza Loan ($83.1
million -- 9.2% of the pool), which
is secured by two 21-story, Class B office buildings connected
by a shared parking garage. The property is located within the
Mid-Wilshire submarket of Los Angeles, California,
approximately ten miles from LAX airport. As of September 2019,
the property was 61% leased, compared to 62% in June
2018. Despite the low occupancy, property performance has
been stable and the 2019 NOI was above levels at securitization.
The loan has amortized 13% since securitization and Moody's LTV
and stressed DSCR are 99% and 1.04X, respectively,
compared to 101% and 1.02X at the 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.
Dariusz Surmacz
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
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
