Moody’s Investors Service slammed its rival ratings agencies for their recent assessment of a CMBS deal backed by a single, large loan, the mortgage on the Altamonte Mall in Altamonte Springs, Fla.
Kroll Bond Rating Agency and Standard & Poor’s both assigned their top rating, ‘AAA,’ to the $96.9 million senior tranche of the deal, Morgan Stanley Capital I Trust S 2013-ALTM.
The deal, which recently closed, also has a $21 million tranche of notes rated ‘AA-‘ by Kroll and S&P; $15.7 million of notes rated ‘A-‘; $19.3 million of notes ‘BBB-‘ and $7.1 million of notes rated ‘BB+’, according to presale reports.
In a special report published today, Moody’s said it believes that all of the classes lack sufficient credit protection for these ratings. “Our analysis would result in ratings four to six notches lower than those assigned,” it said.
Moody’s which did not rate the deal, said it did not value the Altamonte Mall as highly as either Kroll or S&P.
“Given Altamonte’s mid-tier position in the highly competitive greater Orlando market and the potential volatility of its cash flow, we assigned it a stressed value 35% lower than the appraised value, a discount consistent with other recent Moody’s-rated single borrower transactions, and one which allows sufficient cushion for interest rates to rise and cash flows to fall, while still providing a refinance exit cushion appropriate for investment grade ratings,” Moody’s said.
“The lower value results in each class of bonds, from top to bottom, having a credit protection deficiency, since the amount of credit protection for each class is the difference between its advance rate and the collateral value,” the ratings agency said.