CD 2005-CD1 Commercial Mortgage Trust -- Moody's downgrades one class of CD 2005-CD1
Rating Action: Moody's downgrades one class of CD 2005-CD1Global Credit Research - 01 Feb 2021Approximately $16.3 million of structured securities affectedNew York, February 01, 2021 -- Moody's Investors Service, ("Moody's") has downgraded the rating on one class in CD 2005-CD1 Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2005-CD1 as follows:Cl. G, Downgraded to Ca (sf); previously on Jun 14, 2019 Affirmed Caa3 (sf)RATINGS RATIONALEThe rating on Cl. G was downgraded due to the realized plus anticipated losses from the remaining loans in the pool. One of the two remaining loans, 2150 Joshua Path (30% of the pool), is in specially servicing and already real estate owned (REO). Additionally, Cl. G has already experienced realized losses of 28% of its original balance as a result of previously liquidated loans.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 31.1% of the current pooled balance, compared to 47.1% at Moody's last review. Moody's base expected loss plus realized losses is 5.9% of the original pooled balance, essentially the same as at 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 RATINGThe 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 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, an increase in realized and expected losses from specially serviced and troubled loans or interest shortfalls.METHODOLOGY UNDERLYING THE RATING ACTIONThe principal methodology used in this rating was "Moody's Approach to Rating Large Loan and Single Asset/Single Borrower CMBS" published in September 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1190579. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.DEAL PERFORMANCEAs of the January 15, 2021 distribution date, the transaction's aggregate certificate balance has decreased by 99.6% to $16.3 million from $3.9 billion at securitization. The certificates are collateralized by two mortgage loans.Forty-six loans have been liquidated from the pool, resulting in an aggregate realized loss of $225 million (for an average loss severity of 37%). One loan, constituting 30.0% of the pool, is currently in special servicing. The specially serviced loan is the 2150 Joshua Path Loan ($4.9 million), which is secured by an approximately 41,000 square feet (SF), Class B, suburban office building located in Hauppauge, NY. The loan transferred to special servicing in July 2012 due to payment default and became REO in April 2019. Property performance had significantly declined from securitization due to lower occupancy and revenue. As of December 2020, the property was only 13% occupied and there are no new recent leasing prospects.The remaining performing loan represents 70.0% of the pool balance. The loan is the ConnectiCare Office Building Loan ($11.4 million), which is secured by an approximately 100,540 SF single tenant occupied office property located in Farmington, Connecticut. The property is fully occupied by ConnectiCare Insurance. The tenant extended their lease in March 2018 for ten years, however, their rent was reduced from $21.10 PSF to $14.33 PSF. The loan passed its anticipated repayment date in July 2015 and has amortized 40% since securitization. The loan's final maturity date is in July 2035. Due to the single tenant exposure, Moody's incorporated a lit/dark analysis and Moody's loan-to-value (LTV) and stressed debt service coverage ratio (DSCR) are 106% and 1.13X, respectively, compared to 117% and 0.99X at the last review. Moody's stressed DSCR is based on Moody's net cash flow (NCF) and a 9.25% stress rate the agency applied to the loan balance.REGULATORY DISCLOSURESFor 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 rating has been disclosed to the rated entity or its designated agent (s) and issued with no amendment resulting from that disclosure.This rating is 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_1243406.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.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK 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. Amy Wang Associate Analyst Structured Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. 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