Approximately $12.2 million of structured securities affected
New York, June 07, 2019 -- Moody's Investors Service, ("Moody's") has
upgraded the rating on one class and affirmed the rating on one class
in Wachovia Bank Commercial Mortgage Trust 2003-C7, Commercial
Mortgage Pass-Through Certificates, Series 2003-C7,
as follows:
Cl. G, Upgraded to Ba2 (sf); previously on May 23,
2018 Affirmed B1 (sf)
Cl. H, Affirmed C (sf); previously on May 23,
2018 Affirmed C (sf)
RATINGS RATIONALE
The rating on the principal and interest (P&I) class, Cl.
G was upgraded based primarily on an increase in credit support resulting
from loan paydowns and amortization. The deal has paid down 37.1%
since Moody's last review.
The rating on the P&I class, Cl. H, was affirmed
because the rating is consistent with Moody's realized losses.
Class H has already experienced a 71.2% realized loss as
result of previously liquidated loans.
Moody's rating action reflects a base expected loss of 0% of the
current pooled balance, the same as at Moody's last review.
Moody's does not anticipate losses from the remaining collateral in the
current environment. However, over the remaining life of
the transaction, losses may emerge from macro stresses to the environment
and changes in collateral performance. Our ratings reflect the
potential for future losses under varying levels of stress. Moody's
base expected loss plus realized losses is now 6.6% 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 these ratings was "Moody's
Approach to Rating Large Loan and Single Asset/Single Borrower CMBS"
published in July 2017. Please see the Rating Methodologies page
on www.moodys.com for a copy of this methodology.
DEAL PERFORMANCE
As of the May 15, 2019 distribution date, the transaction's
aggregate certificate balance has decreased by 98.8% to
$12.2 million from $1.0 billion at securitization.
The certificates are collateralized by 8 mortgage loans ranging in size
from less than 1% to 55% of the pool. One loan,
constituting 7.2% 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 3,
the same as at Moody's last review.
There are no loans 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.
Six loans have been liquidated from the pool, resulting in an aggregate
realized loss of $66.5 million (for an average loss severity
of 6.6%). There are currently no loans in special
servicing.
Moody's received full year 2017 operating results, and full or partial
year 2018 operating results for 100% of the pool (excluding specially
serviced and defeased loans). Moody's weighted average conduit
LTV is 42%, compared to 57% 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 27% to the most recently
available net operating income (NOI). Moody's value reflects
a weighted average capitalization rate of 9.4%.
Moody's actual and stressed conduit DSCRs are 1.26X and 2.68X,
respectively, compared to 1.12X and 2.30X 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 79.0% of the pool
balance. The largest loan is the Plaza de Laredo Loan ($6.7
million -- 55.0% of the pool), which is secured
by a retail property located in Laredo, Texas, approximately
153 miles south of San Antonio near the border of Mexico. The property
is shadow anchored by Walmart, and the top three tenants at the
property are Home Depot (49.4% of the net rentable area
(NRA); lease expiration August 2021), Academy Sports &
Outdoors (25.6% of NRA; lease expiration July 2023),
and Office Depot (10.3% of NRA; lease expiration December
2023). As per the December 2018 rent roll, the property was
99.8% leased. The loan has amortized 41% since
securitization and is scheduled to mature in October 2023. Moody's
LTV and stressed DSCR are 48% and 2.06X, respectively,
compared to 58% and 1.73X at the last review.
The second largest loan is the Clearwater and Ocala, Florida Loan
(formerly known as the Florida Eckerd Portfolio Loan) ($1.9
million -- 15.8% of the pool), which
was originally secured by two cross-collateralized and cross-defaulted
single-tenant Eckerd stores in Clearwater and Ocala, Florida.
The property in Clearwater is now leased to Main Street Thrift Shop and
the property in Ocala is leased to Dollar Tree. Performance has
remained stable and the loan has amortized 66.5% since securitization.
The loan is scheduled to mature in September 2023. Moody's LTV
and stressed DSCR are 37% and 2.64X, respectively,
compared to 46% and 2.10X at the last review..
The third largest loan is the Eckerd -- St. Augustine,
FL Loan ($1.0 million -- 8.2%
of the pool), which is secured by a single tenant CVS, located
in St. Augustine, which is located approximately 40 miles
south of Jacksonville, Florida. The property is located in
a strong retail corridor, and performance has remained stable.
The loan has amortized 66.6% since securitization and is
scheduled to mature in October 2023. Moody's LTV and stressed DSCR
are 34% and 2.98X, respectively, compared to
35% and 2.78X 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 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
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
