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WFRBS Commercial Mortgage Trust 2011-C5 -- Moody's affirms ten classes of WFRBS 2011-C5

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Rating Action: Moody's affirms ten classes of WFRBS 2011-C5Global Credit Research - 24 Feb 2021Approximately $716.8 million of structured securities affectedNew York, February 24, 2021 -- Moody's Investors Service, ("Moody's") has affirmed the ratings on ten classes in WFRBS Commercial Mortgage Trust 2011-C5, Commercial Mortgage-Pass-Through Certificates, Series 2011-C5:Cl. A-S, Affirmed Aaa (sf); previously on Jul 16, 2019 Affirmed Aaa (sf)Cl. A-4, Affirmed Aaa (sf); previously on Jul 16, 2019 Affirmed Aaa (sf)Cl. B, Affirmed Aa2 (sf); previously on Jul 16, 2019 Affirmed Aa2 (sf)Cl. C, Affirmed A2 (sf); previously on Jul 16, 2019 Affirmed A2 (sf)Cl. D, Affirmed Baa1 (sf); previously on Jul 16, 2019 Affirmed Baa1 (sf)Cl. E, Affirmed Baa3 (sf); previously on Jul 16, 2019 Affirmed Baa3 (sf)Cl. F, Affirmed Ba2 (sf); previously on Jul 16, 2019 Affirmed Ba2 (sf)Cl. G, Affirmed B2 (sf); previously on Jul 16, 2019 Affirmed B2 (sf)Cl. X-A*, Affirmed Aaa (sf); previously on Jul 16, 2019 Affirmed Aaa (sf)Cl. X-B*, Affirmed Ba3 (sf); previously on Jul 16, 2019 Affirmed Ba3 (sf)* Reflects interest-only classesRATINGS RATIONALEThe ratings on 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 IO classes were 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 2.8% of the current pooled balance, compared to 2.3% at Moody's last review. Moody's base expected loss plus realized losses is now 2.1% of the original pooled balance, compared to 1.8% at the prior 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 February 15, 2021 distribution date, the transaction's aggregate certificate balance has decreased by 31.1% to $751.4 million from $1.09 billion at securitization. The certificates are collateralized by 48 mortgage loans ranging in size from less than 1% to 23.4% of the pool, with the top ten loans (excluding defeasance) constituting 58% of the pool. Twenty-five loans, constituting 35% 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 six, compared to ten at Moody's last review.As of the February 2021 remittance report, loans representing 96.9% were current or within their grace period on their debt service payments and 1.1% were beyond their grace period but less than 30 days delinquent.Nine loans, constituting 20.7% of the pool, are 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.Two loans have been liquidated from the pool, contributing to an aggregate realized loss of $2.2 million (for an average loss severity of 23.9%). Two loans, constituting 2.0% of the pool, are currently in special servicing. Both loans transferred to special servicing since April 2020.The largest specially serviced loan is the Marriott Courtyard Monroeville ($7.9 million -- 1.0% of the pool), which is secured by a 98 room lodging property located in Monroeville, Pennsylvania, approximately 15 miles east of Pittsburgh. The surrounding area is a mix of single and multi-family homes & a few commercial properties. Year end 2019 financials report a DSCR of 0.86X with 68.4% occupancy compared to 0.81X and 71.8% in the prior year. The loan had been on the watchlist since August 2014 and has been in a cash trap since October 2018. The loan transferred to special servicing for imminent monetary default at the borrower's request as a result of the coronavirus outbreak. The special servicer is negotiating with the borrower to determine a workout strategy.The second largest specially serviced loan is the Poughkeepsie Galleria II ($7.1 million -- 0.9% of the pool), which is secured by an 82,000 square foot (SF) retail space is attached to the Poughkeepsie Galleria, the 1.2 million SF super-regional mall located in Poughkeepsie, New York. The collateral is 100% occupied by three tenants, Best Buy, Old Navy, and H&M. The loan transferred for imminent monetary default at the borrower's request as a result of the Covid-19 pandemic.Moody's estimates an aggregate $4.2 million loss for the specially serviced loans (28% expected loss on average).Moody's has also assumed a high default probability for two poorly performing loans, constituting 2.2% of the pool, and has estimated an aggregate loss of $3.2 million (a 20% expected loss based on a 50% probability default) from these troubled loans. The largest troubled loan is the 8301 Professional Place loan ($14.1 million -- 1.8% of the pool), which is secured by an approximately 137,000 SF, Class B office building located in Landover, Maryland. As of December 2019, the property was 69% occupied with a 0.62X 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 100% of the pool, and full or partial year 2020 operating results for 80% of the pool (excluding specially serviced and defeased loans). Moody's weighted average conduit LTV is 90%, compared to 83% 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 23% 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 1.31X and 1.18X, respectively, compared to 1.48X and 1.26X 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 38.7% of the pool balance. The largest loan is The Domain Loan ($175.8 million -- 23.4% of the pool), which is secured by an 879,000 SF component of a 1,225,000 SF open-air lifestyle center located in Austin, Texas. The property is located approximately eight miles north of the CBD in Austin's "Golden Triangle." The property was developed for $388 million ($441/sf) in 2007-2008 and also includes 828 residential units that are not part of the collateral. The subject is anchored by Dillard's (non-collateral), Macy's (non-collateral), Neiman Marcus, Dick's Sporting Goods and an 8-screen IPIC Theatres. The collateral component of the property was 91% leased as of September 2020, compared to 92% as of December 2019 and 2018. The borrower had requested relief as a result of the coronavirus outbreak, but subsequently withdrew the request. The loan has amortized approximately 15% since securitization. Moody's LTV and stressed DSCR are 71% and 1.29X, respectively, compared to 62% and 1.45X at the last review.The second largest loan is the Arbor Walk and Palms Crossing Loan ($69.2 million -- 9.2% of the pool), which is secured by two anchored retail properties located in Austin, Texas (Arbor Walk) and McAllen, Texas (Palms Crossing). Arbor walk is a 465,000 SF retail center anchored by Home Depot, Marshalls, and Jo-Ann Fabrics and is located eight miles north of the Austin CBD in close proximity to The Domain. The Arbor Walk property is subject to a ground lease with the University of Texas which expires in 2056. Palms Crossing is an 328,000 SF retail center anchored by a Hobby Lobby and Overstock. The property is located six miles north of the border with Mexico. As of September 2020, the properties were collectively 92% leased, compared to 89% leased in December 2018 and 98% leased in December 2017. Arbor Walk was approximately 98% leased as of September 2020, while Palms Crossing was approximately 82% leased following the permanent closure of anchor Beall's in 2020. The loan was initially on the watchlist due to the parent company of Babies R Us, Toys R Us filing for Chapter 11 bankruptcy protection in 2017. The borrower is currently in negotiations with a prospective tenant for the entire space with lease commencement in November 2020 but has been extended to April 2021. Moody's LTV and stressed DSCR are 108% and 0.95X, respectively, compared to 91% and 1.09X at the last review.The third largest loan is the Village of Rochester Hills Loan ($45.7 million -- 6.1% of the pool), which is secured by a Class A lifestyle center located in Rochester Hills, Michigan, 33 miles north of the Detroit CBD. The property encompasses approximately 375,500 SF anchored by Whole Foods, and to be shadow anchored by a Von Maur, which is backfilling a former Carsons. Other national tenants include Barnes & Noble, Pottery Barn, GAP and Banana Republic. The property was 96% leased as of September 2020, unchanged from December 2019 and improved from 88% as of December 2018. Property performance has declined since 2016, and the property has never achieved the underwritten levels. The loan remains current. Moody's LTV and stressed DSCR are 143% and 0.81X, respectively, compared to 122% and 0.95X 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. Rhett Terrell 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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