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JPMBB Commercial Mortgage Securities Trust 2013-C14 -- Moody's affirms five and downgrades six classes of JPMBB 2013-C14

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Rating Action: Moody's affirms five and downgrades six classes of JPMBB 2013-C14Global Credit Research - 17 Feb 2021Approximately $670 million of structured securities affectedNew York, February 17, 2021 -- Moody's Investors Service, ("Moody's") has affirmed the ratings on five classes and downgraded the ratings on six classes in JPMBB Commercial Mortgage Securities Trust 2013-C14, Commercial Mortgage Pass-Through Certificates, Series 2013-C14 as follows:Cl. A-3, Affirmed Aaa (sf); previously on Jul 8, 2020 Affirmed Aaa (sf)Cl. A-4, Affirmed Aaa (sf); previously on Jul 8, 2020 Affirmed Aaa (sf)Cl. A-S, Affirmed Aaa (sf); previously on Jul 8, 2020 Affirmed Aaa (sf)Cl. A-SB, Affirmed Aaa (sf); previously on Jul 8, 2020 Affirmed Aaa (sf)Cl. B, Downgraded to A1 (sf); previously on Jul 8, 2020 Affirmed Aa3 (sf)Cl. C, Downgraded to Ba1 (sf); previously on Jul 8, 2020 Affirmed A3 (sf)Cl. D, Downgraded to B3 (sf); previously on Jul 8, 2020 Downgraded to Ba2 (sf)Cl. E, Downgraded to Caa1 (sf); previously on Jul 8, 2020 Downgraded to B1 (sf)Cl. F, Downgraded to Caa3 (sf); previously on Jul 8, 2020 Downgraded to B3 (sf)Cl. G, Downgraded to C (sf); previously on Jul 8, 2020 Downgraded to Caa3 (sf)Cl. X-A*, Affirmed Aaa (sf); previously on Jul 8, 2020 Affirmed Aaa (sf)* Reflects interest-only classesRATINGS RATIONALEThe ratings on four principal and interest (P&I) classes were affirmed due to the credit support and because the transaction's key metrics, including Moody's loan-to-value (LTV) ratio and Moody's stressed debt service coverage ratio (DSCR), are within acceptable ranges.The ratings on six P&I classes were downgraded due to higher anticipated losses and increased interest shortfall risk driven by the significant exposure to specially serviced loans, which are primarily secured by regional malls. Specially serviced loans represent nearly 27% of the pool, of which the three largest, representing 25% of the pool, are secured by regional malls. The three specially serviced mall loans are the Meadows Mall Loan (12.4% of the pool), the Southridge Mall Loan (9.4% of the pool), and the Country Club Mall Loan (3.0% of the pool), all of which were already experiencing declining performance prior to 2020. Furthermore, two of the malls are more than 90 days delinquent and the borrowers have indicated they would no longer be funding debt service. Appraisal reductions have not yet been recognized on any of the specially serviced malls loans, therefore, Moody's anticipates interest shortfalls may increase materially.The rating on the interest-only (IO) class, Cl. X-A, 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 17.1% of the current pooled balance, compared to 9.7% at Moody's last review. Moody's base expected loss plus realized losses is now 10.6% of the original pooled balance, compared to 6.1% 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 RATINGSThe 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 ACTIONThe methodologies used in rating all classes except 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 Large Loan and Single Asset/Single Borrower CMBS" published in September 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1190579. 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, "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 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 DEAL PERFORMANCEAs of the January 15, 2021 distribution date, the transaction's aggregate certificate balance has decreased by 38.0% to $711.7 million from $1.1 billion at securitization. The certificates are collateralized by 32 mortgage loans ranging in size from less than 1% to 12.7% of the pool, with the top ten loans (excluding defeasance) constituting 63.2% of the pool. Six loans, constituting 19.9% 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 11, the same as at Moody's last review.As of the January 2021 remittance report, loans representing 82% were current or within their grace period on their debt service payments and 18% were over 90 days delinquent.Eleven loans, constituting 31.9% of the pool, are on the master servicer's watchlist, of which two loans, representing 2.4% of the pool, indicate the borrower has requested relief/received loan modifications 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.No loans have been liquidated from the pool and six loans, constituting 27.3% of the pool, are currently in special servicing. Four of the specially serviced loans, representing 25.4% of the pool, have transferred to special servicing since March 2020.The largest specially serviced loan is the Meadows Mall Loan ($88.0 million -- 12.4% of the pool), which represents a pari-passu portion of a $131.6 million mortgage loan. The loan is secured by an approximately 308,000 SF portion of a 945,000 square feet (SF) regional mall located five miles west of the Strip in Las Vegas, Nevada. The mall is anchored by Curacao, Dillard's Clearance Center, JC Penney, and Macy's. All anchor tenants own their respective stores which are not included as collateral for the loan. A prior non-collateral anchor, Sears, vacated in February 2020. The first floor of Sears was partially backfilled by Round1 Bowling and Amusement which opened in November 2019. As of October 2020, the collateral was 86% occupied (78% when excluding specialty leasing tenants) compared to 91% and 84%, respectively, in March 2020. For the trailing twelve-month (TTM) period ending September 2020, in-line sales for tenants less than 10,000 SF was $347 per square foot (PSF) compared to $389 PSF for the TTM period ending March 2020 and $404 PSF as of December 2019. The September 2020 TTM NOI declined approximately 4% from 2019, 14% from 2018 and was 23% lower than in 2013. The decline in property performance has been a result of decreased revenues. In October 2020, the loan transferred to the special servicer for monetary default as the property's cash flow had been further impacted by the coronavirus pandemic. The borrower has indicated that they would no longer be funding debt service and requested a short-term forbearance. The special servicer is currently dual tracking the foreclosure process along with potential loan modifications. The loan has amortized 19.8% since securitization and is last paid through its July 2020 debt service payment. The lockbox funds are expected to be applied to the payments to bring the loan current through January 2021.The second largest specially serviced loan is the Southridge Mall Loan ($67.0 million -- 9.4% of the pool), which represents a pari-passu portion of a $111.6 million mortgage loan. The loan is secured by a 554,000 SF portion of a 1.2 million SF regional mall in Greendale, Wisconsin, a suburb of Milwaukee. At securitization, the mall was anchored by non-collateral anchors Boston Store, Sears, J.C. Penney, and collateral anchors, Macy's and Kohl's. Sears and Boston Store vacated the property in 2017 and 2018, respectively. Subsequently Kohl's moved their store to a new retail development in late 2018. The former Sears space was partially backfilled by a Dick's Sporting Goods/Golf Galaxy, Round1 Bowling and Amusement, and T.J. Maxx, all of which opened for business between 2018 and 2019. As of September 2020, the collateral was 69% occupied and in-line occupancy was 73%. The loan was transferred to special servicing in July 2020 for imminent monetary payment default and the borrower had indicated at the time that they would agree to a stipulated receivership and friendly foreclosure. A receiver was appointed in December 2020 and enforcement options are being evaluated. The loan has amortized 10.7% since securitization and was recently made current through its January 2021 payment.The third largest specially serviced loan is the Country Club Mall Loan ($21.6 million -- 3.0% of the pool), which is secured by an approximately 394,000 SF component of a 597,000 SF regional mall located in LaValle, Maryland. The non-collateral portion is occupied by a Walmart Supercenter. Two collateral anchor tenants, Bon-Ton (23% of NRA) and Sears (19% of NRA), vacated the property in 2018 and 2020, respectively. The property's remaining anchor, J.C. Penney (18% of NRA) was listed as one of the expected store closures as a result of the company's Chapter 11 Bankruptcy proceedings and is no longer listed in the mall's directory. Excluding these anchors, the next largest tenants are T.J. Maxx (6% of NRA) and Country Club Cinema (6% of NRA) with lease expirations in March 2023 and July 2031, respectively. As of June 2020, the total property was 75% occupied including Sears and J.C. Penney, and 35% occupied when excluded. The loan was transferred to special servicing in June 2020 and a note sale was executed in December 2020. The loan has amortized 17.3% since securitization and is over 90 days delinquent on the debt service payments.The remaining three specially serviced loans are secured by two hotel properties and one mixed-use property.Moody's has also assumed a high default probability for two poorly performing loans, constituting 2.4% of the pool. The largest troubled loan is the Hilton Garden Inn -- Fort Worth, TX Loan ($10.4 million -- 1.5% of the pool), which is secured by a 127-room limited service hotel located in Fort Worth, Texas. The loan has been on the watchlist since April 2020 for borrower relief request due to the impact of the coronavirus pandemic. The loan is being monitored for delinquency and the borrower is working with the servicer for a secondary relief request.The second largest troubled loan is the Hyatt Place North Charleston Loan ($7.0 million -- 1.0% of the pool), which is secured by a 113-room limited service hotel located in North Charleston, South Carolina. The loan has been on the watchlist since January 2020 due to a decrease in DSCR. The annualized nine-month NOI through September 2020 exhibits a negative cash flow and the 2019 NOI decreased by 32% when compared to 2018. Borrower relief was initially granted for a deferral of non-tax, non-insurance reserves with repayment to commence in October 2020, and additional relief was granted which postpones expected repayment to April 2021.Moody's has estimated an aggregate loss of $103.9 million (a 50.0% expected loss on average) for the troubled and specially serviced loans.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 85% of the pool (excluding specially serviced and defeased loans). Moody's weighted average conduit LTV is 102%, compared to 109% 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 20% to the most recently available net operating income (NOI). Moody's value reflects a weighted average capitalization rate of 10.0%.Moody's actual and stressed conduit DSCRs are 1.36X and 1.09X, respectively, compared to 1.32X and 1.05X 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 25.3% of the pool balance. The largest loan is the Spirit Portfolio Loan ($90.6 million -- 12.7% of the pool), which is secured by a portfolio of 26 retail, industrial, office, and mixed-use properties located across 13 states for a total of approximately 1.5 million SF. The largest concentration by square footage is located in New Hampshire (37% of NRA), followed by Illinois (17% of NRA), and North Carolina (11% of NRA). Twenty-five of the properties are leased to single tenants which include LA Fitness, CVS, and Walgreens. The loan has been on the watchlist since November 2019 due to the servicer advancing funds for force place insurance. The loan has amortized 11.3% since securitization and is current through its January 2021 payment. Moody's LTV and stressed DSCR are 81% and 1.30X, respectively, compared to 79% and 1.33X at the last review.The second largest loan is the Plaza La Cienega Loan ($59.0 million -- 8.3% of the pool), which is secured by an approximately 308,100 SF mixed-use retail and office property located in Los Angeles, California. The largest tenant is LA Fitness (21% of NRA) with a lease expiration in January 2037. The second largest tenant, Target Corporation (20% of NRA), backfilled the prior Toys "R" Us space with a lease start date in January 2020 and lease expiration in January 2036. As of the September 2020 rent roll, the property was 95% occupied, unchanged from 2019, and compared to 91% in 2018. The loan has amortized 3.4% since securitization and is current through its January 2021 payment. Moody's LTV and stressed DSCR are 127% and 0.78X, respectively, compared to 128% and 0.78X at the last review.The third largest loan is the Sand Creek Crossing Loan ($30.3 million -- 4.3% of the pool), which is secured by an approximately 251,600 SF retail property located in Brentwood, California. The property is grocery-anchored by Raley (26% of NRA), with a lease expiration in June 2028. The second largest tenant, Ross Stores (12% of NRA), has a lease expiration in January 2024 and the third largest tenant, T.J. Maxx (11% of NRA), has a lease expiration in August 2022. The remaining tenants each account for less than 10% of NRA. The loan was previously on the watchlist for relief request which was subsequently cancelled and was returned to the watchlist in November 2020 due to DSCR falling below the threshold. The cash flow was impacted by the shutdown due to the coronavirus pandemic and tenants were provided abatements or deferred rent through June 2020. The loan has amortized 13.3% since securitization and is current through its January 2021 payment. Moody's LTV and stressed DSCR are 91% and 1.13X, respectively, compared to 92% and 1.11X at the last review.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 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 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 © 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. 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This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements. ​