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JPMBB Commercial Mtg Sec Tr 2014-C18 -- Moody's affirms six and downgrades three classes of JPMBB 2014-C18

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Rating Action: Moody's affirms six and downgrades three classes of JPMBB 2014-C18Global Credit Research - 17 Feb 2021Approximately $629.9 million of structured securities affectedNew York, February 17, 2021 -- Moody's Investors Service, ("Moody's") has affirmed the ratings on six classes and downgraded the ratings on three classes in JPMBB Commercial Mortgage Securities Trust 2014-C18, Commercial Mortgage Pass-Through Certificates, Series 2014-C18 as follows:Cl. A-4A1, Affirmed Aaa (sf); previously on Jul 1, 2019 Affirmed Aaa (sf) Cl. A-4A2, Affirmed Aaa (sf); previously on Jul 1, 2019 Affirmed Aaa (sf)Cl. A-5, Affirmed Aaa (sf); previously on Jul 1, 2019 Affirmed Aaa (sf)Cl. A-S, Affirmed Aaa (sf); previously on Jul 1, 2019 Affirmed Aaa (sf)Cl. A-SB, Affirmed Aaa (sf); previously on Jul 1, 2019 Affirmed Aaa (sf)Cl. B, Downgraded to A2 (sf); previously on Jul 1, 2019 Affirmed Aa3 (sf)Cl. C, Downgraded to Baa3 (sf); previously on Jul 1, 2019 Affirmed A3 (sf)Cl. EC**, Downgraded to A3 (sf); previously on Jul 1, 2019 Affirmed A1 (sf)Cl. X-A*, Affirmed Aaa (sf); previously on Jul 1, 2019 Affirmed Aaa (sf)* Reflects interest-only classes** Reflects exchangeable classesRATINGS RATIONALEThe ratings on the five of the 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 ratings on the P&I classes, Cl. B and Cl. C, were downgraded due to a decline in pool performance and higher realized and anticipated losses from specially serviced and troubled loans. Specially serviced loans now represent nearly 10% of the pool. The largest specially serviced loan is The Meadows Mall Loan (6.0% of the pool) which has exhibited declining performance prior to 2020 and the borrower has indicated that they would no longer be funding debt service and has requested short-term forbearance. Furthermore, an additional performing loan, the Shops at Wiregrass Loan (6.1% of the pool) has realized a significant decline in performance over the past few years and is identified as a troubled loan. In aggregate retail represents 59% of the pool, with four loans (38% of the pool) secured by regional malls.The rating on the IO class, Cl. X-A, was affirmed based on the credit quality of the referenced classes.The rating on the exchangeable class, Cl. EC, was downgraded due to the decline in credit quality of the referenced exchangeable 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 9.9% of the current pooled balance, compared to 4.5% at Moody's last review. Moody's base expected loss plus realized losses is now 10.5% of the original pooled balance, compared to 3.7% 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 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 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 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/researchdocumentcontentpage.aspx?docid=PBS_1230078. 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 *) and exchangeable classes (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 24% to $726.4 million from $957.6 million at securitization. The certificates are collateralized by 40 mortgage loans ranging in size from less than 1% to 14% of the pool, with the top ten loans (excluding defeasance) constituting 66% of the pool. No loans have investment-grade structured credit assessments. Seven loans, constituting 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 14, compared to 16 at Moody's last review.As of the January 2020 remittance report, loans representing 88% were current or within their grace period on their debt service payments, 1% were beyond their grace period but less than 30 days delinquent and 10% were between 90+ days delinquent.Sixteen loans, constituting 60% of the pool, are on the master servicer's watchlist, of which seven loans, representing 40% 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.One loan has been liquidated from the pool, resulting in an aggregate realized loss of $29 million (for an average loss severity of 97%). Four loans, constituting 10% of the pool, are currently in special servicing. All four of the specially serviced loans have transferred to special servicing since May 2020.The largest specially serviced loan is the Meadows Mall Loan ($43.6 million -- 6.0% 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 square feet (SF) portion of a 945,000 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 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 has 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% 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 Geneva Shopping Center ($11.7 million -- 1.6% of the pool), which is secured by an approximately 189,000 SF shopping center in Geneva, New York. The center was originally anchored by a Tops Grocery Store (27% of NRA), however the tenant vacated at lease expiration in November 2018. In March 2020, Dollar Tree (5% of NRA) signed a lease for 10,281 SF of the former Tops Grocery Store space with a lease expiration in 2027. As of June 2020, the property was 71% leased compared to 73% as of December 2019. As of December 2019, the property's NOI declined approximately 23% from 2018 and was 29% lower than in 2014. The loan transferred to special servicing in December 2020 as the property's cash flow has been further impacted by the coronavirus pandemic. The special servicer is currently in the process of setting up cash management while discussing a potential workout. The loan benefits from amortization and has amortized 11% since securitization and is current through its September 2020 payment date.The third largest specially serviced loan is the Holiday Inn Plainview Loan ($9.8 million -- 1.3% of the pool), which is secured by a 125-room full-service Holiday Inn located in Plainview, New York, approximately 30 miles east of New York City. The property's 2019 NOI had increased by 8% from 2018 but was 3% below securitization. The borrower requested relief due to the coronavirus outbreak in April 2020 and the loan transferred to special servicing in September 2020 for payment default. The loan benefits from amortization and has amortized 15% since securitization. The loan was last paid through June 2020 and the special servicer indicated that discussions with borrower are still ongoing.The one remaining specially serviced loan is secured by a portfolio of three single-tenant retail properties and represents less than 1% of the pool.Moody's has also assumed a high default probability for one poorly performing loan, constituting 6.1% of the pool, and has estimated an aggregate loss of $45 million (a 41% expected loss on average) from these specially serviced and troubled loans.The troubled loan is the Shops at Wiregrass Loan ($22.0 million -- 3.1% of the pool), which represents a pari-passu portion of a $75.9 million mortgage loan. The loan is secured by a 456,637 SF outdoor lifestyle center located in West Chapel, Florida, which is approximately 20 miles northeast of Tampa. The mall is anchored by Dillard's, Macy's and JC Penney. Both the Dillard's and Macy's own their respective stores which are not included as collateral for the loan. As of June 2020, the collateral occupancy and in-line occupancy were 87% and 77%, respectively. As of December 2019, the collateral occupancy at the property decreased to 87% from 94% in December 2018 driven by the departures of several in-line tenants including Forever 21 (4.5% of NRA), Charming Charlie (1.9% of NRA) and Express (1.8% of NRA). Inline sales at the property as of June 2020 were $309 PSF compared to $348 PSF in June 2019. The loan benefits from amortization and has amortized 12% since securitization. Property performance has steadily declined since 2017, and the year end 2019 NOI was 33% lower than in 2017 and 29% lower than underwritten NOI. The loan has been on the master servicers watchlist since August 2020 when the borrower requested relief due to the coronavirus outbreak. The servicer noted that they are currently working towards a possible solution with the borrower regarding the relief request.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 100% of the pool and partial year 2020 operating results for 83% of the pool (excluding specially serviced and defeased loans). Moody's weighted average conduit LTV is 97%, compared to 102% 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 32% to the most recently available net operating income (NOI). Moody's value reflects a weighted average capitalization rate of 9.3%.Moody's actual and stressed conduit DSCRs are 1.55X and 1.07X, respectively, compared to 1.36X and 1.02X 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 36% of the pool balance. The largest loan is the Miami International Mall Loan ($100.0 million -- 13.8% of the pool), which represents a pari-passu portion of a $160.0 million mortgage loan. The loan is secured by a 307,000 SF component of an approximate 1.1 million SF super-regional mall located in Miami, Florida. The mall is anchored by Macy's, JC Penney and Kohl's. The Sears closed its location at the mall in 2018 and this anchor box in owned by Seritage Growth Properties. All the current anchor tenants own their own land and improvements, which are not part of the collateral. Major collateral tenants include H&M, Gap, Old Navy, Victoria's Secret and Forever 21. As of September 2020, the total property was 96% leased (including the vacated Sears space), compared to 98% in June 2019. As of September 2020, the inline space was 88% leased, compared to 91% in December 2019. Per the September 2020 rent roll, approximately 30% of in-line tenants are on month-to-month leases or have lease expirations over the next twelve months. As of April 2019, the projected full year 2019 tenant inline sales (less than 10,000 SF) were $585 PSF compared to $640 PSF as of year-end 2018 and $722 PSF as of year-end 2017. The loan is interest only for the full-term and does not benefit from amortization. Moody's LTV and stressed DSCR are 77% and 1.22X, respectively, compared to 67% and 1.26X at the last review.The second largest loan is the Jordan Creek Towne Center Loan ($87.3 million -- 12% of the pool), which represents a pari-passu portion of a $191.9 million mortgage loan. The loan is secured by a 503,000 SF component of a 1.1 million SF super-regional mall located in West Des Moines, Iowa. The mall is part of the larger Jordan Creek Development that also features the "Village at Jordan Creek" lifestyle center and the "Lake District", a three-acre lake surrounded by bike trails, waterfront dining, a hotel and an amphitheater, both of which are not part of the collateral. The mall is anchored by a Dillard's, Scheels All Sports and Century Theatres. A prior non-collateral anchor, Younker's, vacated in 2018. Dillard's and the former Younkers space are not part of the collateral. Von Maur announced its plans to build-out a space at the property, potentially utilizing the former Younker's space, with plans to open in 2022. Additionally, H&M (4.5% of NRA) signed a lease commencing in August 2021 taking over several empty store fronts near the mall's former Younkers space with a lease expiration in January 2032. As of June 2020, the property was 94% leased, while inline space was 91% leased. As of the TTM period ending October 2020 inline sales, excluding Apple, food court and jewelry tenants were $344 PSF compared to $451 PSF as of December 2019 and $421 PSF at securitization. As of December 2019, the property's NOI had declined 13% when compared to December 2018. In October 2020 the borrower had been granted a non-transfer consent related to the coronavirus pandemic. As a result, the borrower was permitted to access TI Reserve Funds to meet the debt service obligations from September to November 2020. The servicer has implemented a cash management account until all TI Reserve Funds have been fully reimbursed. As of June 2020, the property's NOI DSCR was 1.54X. The loan has amortized over 12% since securitization. Moody's LTV and stressed DSCR are 90% and 1.03X, respectively, compared to 83% and 1.08X at the last review.The third largest loan is the Marriott Anaheim Loan ($75.1 million -- 10.3% of the pool), which represents a pari-passu portion of a $103.2 million mortgage loan. The loan is secured by a 1,030-room full-service hotel located in Anaheim, California. The property is adjacent to the Anaheim Convention Center and two blocks south of Disneyland. The hotel includes five restaurants and 80,000 SF of meeting space along with other amenities. Marriott Hotel Services, Inc., leases the hotel from the owner and is required to pay a fixed annual rent payment in exchange for control of all revenues and expenses. The fixed annual rent payment is equivalent to 10% of the landlord's investment, which was $89.78 million as of November 2013. The operating lease has a 10-year remaining term through 2031, with one remaining 25-year extension option for a fully extended term through 2056. The loan was originally structured with a three-year interest only period which expired in February 2017 and the loan has since amortized 6%. Moody's LTV and stressed DSCR are 102% and 0.94X, respectively, compared to 105% and 0.91X at Moody's 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. Yoni Lobell Associate Lead Analyst Structured Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. 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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. ​