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Rating Action: Moody's affirms six classes of JPMBB 2015-C30
Global Credit Research - 15 Jan 2021
Approximately $855 million of structured securities affected
New York, January 15, 2021 -- Moody's Investors Service, ("Moody's") has affirmed the ratings on six classes in JPMBB Commercial Mortgage Securities Trust 2015-C30, Commercial Mortgage Pass-Through Certificates, Series 2015-C30 as follows:
Cl. A-3, Affirmed Aaa (sf); previously on Jul 26, 2018 Affirmed Aaa (sf)
Cl. A-4, Affirmed Aaa (sf); previously on Jul 26, 2018 Affirmed Aaa (sf)
Cl. A-5, Affirmed Aaa (sf); previously on Jul 26, 2018 Affirmed Aaa (sf)
Cl. A-SB, Affirmed Aaa (sf); previously on Jul 26, 2018 Affirmed Aaa (sf)
Cl. A-S, Affirmed Aa2 (sf); previously on Jul 26, 2018 Affirmed Aa2 (sf)
Cl. X-A*, Affirmed Aa1 (sf); previously on Jul 26, 2018 Affirmed Aa1 (sf)
* Reflects interest-only class
The ratings on five principal and interest (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 interest-only (IO) class was affirmed based on the credit quality of the referenced classes.
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 6.1% of the current pooled balance, compared to 4.6% at Moody's last review. Moody's base expected loss plus realized losses is now 5.3% of the original pooled balance, compared to 4.4% 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 principal methodology used in rating all classes except interest-only classes was "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in September 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1244778. The methodologies used in rating interest-only classes were "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in September 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1244778 and "Moody's Approach to Rating Structured Finance Interest-Only (IO) Securities" published in February 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1111179. Please see the list of ratings at the top of this announcement to identify which classes are interest-only (indicated by the *). Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.
As of the December 17, 2020 distribution date, the transaction's aggregate certificate balance has decreased by 13.1% to $1.2 billion from $1.3 billion at securitization. The certificates are collateralized by 63 mortgage loans ranging in size from less than 1% to 7.2% of the pool, with the top ten loans (excluding defeasance) constituting 48.1% of the pool. Two loans, constituting 9.8% of the pool, have investment-grade structured credit assessments. Four loans, constituting 2.1% 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 29, compared to 33 at Moody's last review.
As of the December 2020 remittance report, loans representing 98% were current or within their grace period on their debt service payments and 2% were beyond their grace period but less than 30 days delinquent.
Twenty-six loans, constituting 39.6% of the pool, are on the master servicer's watchlist, of which four loans, representing 3.3% of the pool, indicate the borrower has requested relief in relation to coronavirus impact on the property. 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.
The pool has not incurred any realized losses and one loan, the 69-02 Garfield Avenue Loan ($4.8 million -- 0.4% of the pool), is in special servicing. The specially serviced loan is secured by a 37,480 square feet (SF) single-tenant restaurant/banquet hall property located in Woodside, New York. The property's performance has been impacted by the coronavirus pandemic and special servicer commentary indicated the tenant has not been paying rent. The loan was transferred to special servicing in September 2020 for maturity default as the loan had an original maturity date in July 2020. The borrower was provided an initial 60-day forbearance that terminated in September 2020. A pre-negotiation letter has been sent to the borrower and the loan is being monitored while the servicer continues to review resolution options.
Moody's has also assumed a high default probability for two poorly performing loans, the largest troubled loan is the One City Centre Loan ($40.0 million -- 3.5% of the pool), which represents a pari-passu portion of a $100.0 million loan. The loan is secured by an approximately 602,100 SF, Class A, office building located in the central business district (CBD) of Houston, Texas. The largest tenant, Waste Management, Inc. (41% of net rentable area (NRA)), vacated at the end of their lease term in December 2020. The property was 68% leased as of September 2020, however, excluding Waste Management, Inc this would be reduced to 28%. The loan has been on the watchlist since September 2019 due to declines in DSCR.
The credit risk of loans is determined primarily by two factors: 1) Moody's assessment of the probability of default, which is largely driven by each loan's DSCR, and 2) Moody's assessment of the severity of loss upon a default, which is largely driven by each loan's loan-to-value ratio, referred to as the Moody's LTV or MLTV. As described in the CMBS methodology used to rate this transaction, we make various adjustments to the MLTV. We adjust the MLTV for each loan using a value that reflects capitalization (cap) rates that are between our sustainable cap rates and market cap rates. We also use an adjusted loan balance that reflects each loan's amortization profile. The MLTV reported in this publication reflects the MLTV before the adjustments described in the methodology.
Moody's received full year 2019 operating results for 95% of the pool, and full or partial year 2020 operating results for 90% of the pool (excluding specially serviced and defeased loans). Moody's weighted average conduit LTV is 115%, unchanged from 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 15.7% 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 1.46X and 0.97X, respectively, compared to 1.51X 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 largest loan with a structured credit assessment is the Pearlridge Center Loan ($72.0 million -- 6.2% of the pool), which represents a pari-passu portion of a $130.4 million mortgage loan with $94.6 million of subordinate debt. The loan is secured by fee and leasehold interests in a super-regional mall located in Aiea, Hawaii. The property is the second largest enclosed shopping center in Hawaii at 1.1 million square feet (SF), with approximately 903,700 SF serving as the loan's collateral. The three largest collateral tenants are Macy's (19% of NRA), Bed Bath and Beyond (7% of NRA), and Pearlridge Mall Theatres (5% of NRA). The Bed Bath and Beyond has an upcoming lease expiration at the end of January 2021 and is not currently on the store closure list. As of September 2020, the property was 92% leased and the collateral was 94% occupied. The mall temporarily closed and re-opened at intervals in 2020 due to the coronavirus pandemic. Through year-end 2019, the property's NOI has declined slightly since securitization due to the increase in operating expenses outpacing the increase in revenues. The loan is interest-only through its entire term and is current through its December 2020 payment. For the trailing twelve-month period ending June 2020, the loan's NOI DSCR was 2.94X and the loan matures in June 2025. Moody's structured credit assessment and stressed DSCR are baa1 (sca.pd) and 1.71X, respectively.
The second loan with a structured credit assessment is the Scottsdale Quarter Loan ($42.0 million -- 3.6% of the pool), which represents a pari-passu portion of a $95.0 million mortgage loan with $70.0 million of subordinate debt. The loan is secured by an approximately 542,000 SF, mixed-use property consisting of retail and office space, a hotel, and 2,379 surface and garage parking spaces. At securitization, a non-collateral third phase development was underway for additional residential, office, hotel, and retail space. The largest collateral tenant is Starwood Hotels & Resorts (13% of NRA) with a lease expiration in February 2027. The second largest tenant, IPIC Theaters (8% of NRA), recently vacated in 2020 prior to their lease expiration due to financial restructuring and had their last screening at the end of January 2020. The remaining tenants at the property each account for less than 5% of NRA. As of September 2020, the property was 76% leased, compared to 83% at year-end 2019, and 91% at year-end 2018. The loan is interest-only through its entire term and is current through its December 2020 payment. For the trailing twelve-month period ending June 2020, the senior loan's NOI DSCR was 4.32X, compared to 4.88X in 2019. Moody's structured credit assessment and stressed DSCR are baa2 (sca.pd) and 1.33X, respectively.
The top three conduit loans represent 17.6% of the pool balance. The largest loan is the One Shell Square Loan ($83.0 million -- 7.2% of the pool), which represents a pari-passu portion of a $116.3 million mortgage loan. The property was also encumbered with a $20.0 million mezzanine debt at securitization. The loan is secured by a 51-story, LEED Gold certified, Class-A office tower as well as an adjoining 10-level parking garage located within the Central Business District (CBD) of New Orleans, Louisiana. The property was constructed in 1972 and offers approximately 1.24 million square feet of leasable office space, several retail spaces in the interior lobby and an adjoining parking garage. The largest tenant, Shell Oil Company, reduced its presence at the property since securitization and currently accounts for 29% of NRA. The building was renamed to Hancock Whitney Center when the second largest tenant, Hancock Whitney (17% of NRA), moved their regional headquarters to the property in 2018. As of September 2020, the property was 86% occupied, compared to 89% at year-end 2019, and 91% at year-end 2018. After an initial interest-only period, the loan has amortized 7.8% since securitization. The loan is current through its December 2020 payment and Moody's LTV and stressed DSCR are 115% and 0.94X, respectively, compared to 110% and 0.97X at the last review.
The second largest loan is the Sunbelt Portfolio Loan ($63.3 million -- 5.5% of the pool), which represents a pari-passu portion of a $132.7 million mortgage loan. The property was also encumbered with a $21.5 million mezzanine debt at securitization. The loan is secured by three office buildings located in Birmingham, Alabama and Columbia, South Carolina. The three properties are the Shipt Tower (formerly known as the Wells Fargo Tower) (Birmingham, Alabama), The Meridian Building (Columbia, South Carolina) and The Inverness Center (Birmingham, Alabama). The portfolio improvements were constructed at various points between 1980 and 2006 and total 1.32 million SF of rentable area. A number of tenants had vacated since securitization including Wells Fargo Bank, N.A., Southern Company, and SunGard. However, several new leases assisted with backfilling some of this vacancy including Shipt Inc (subsidiary of Target) (5% of NRA) and McAngus Goudelock & Courie (3% of NRA). As of September 2020, the portfolio was 81% leased. The property's 2019 NOI declined year over year due to lower rental revenues. The loan has amortized 9.6% since securitization and is current through its December 2020 payment. Moody's LTV and stressed DSCR are 115% and 0.94X, respectively, compared to 105% and 1.02X at the last review.
The third largest loan is the Brunswick Portfolio Loan ($57.0 million -- 4.9% of the pool), which represents a pari-passu portion of a $105.1 million mortgage loan. The loan is secured by 58 bowling centers located across 15 states and one in Ontario, Canada. Many of the bowling centers are proximate to major metropolitan areas including Atlanta, Los Angeles, Phoenix, Chicago, Denver and Minneapolis. All 58 properties are encumbered by one master lease with an initial term of 20 years and is guaranteed by Bowlmor AMF. The lease provides payments on an absolute net basis, with no rent set-offs or terminations. The initial fixed rent was $16 million per year increasing by 15% on the 61st full calendar month. Due to the single tenant exposure of the properties, Moody's analysis was based on a lit/dark analysis. As of September 2020, all of the centers were 100% occupied. The loan is currently on the watchlist due to environmental issues at three of the properties. The loan has amortized 12.4% since securitization and is current through its December 2020 payment. Moody's LTV and stressed DSCR are 112% and 1.34X, respectively, compared to 119% and 1.26X at the last review.
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_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 Lead 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 - 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
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