Morningstar DBRS Downgrades One Class of MSC Mortgage Securities Trust, 2012-C4

DBRS, Inc. (Morningstar DBRS) downgraded the credit rating on one class of Commercial Mortgage Pass-Through Certificates, Series 2012-C4 issued by MSC Mortgage Securities Trust, 2012-C4 as follows:

-- Class D to CCC from BBB (high) (sf)

In addition, Morningstar DBRS confirmed the following credit ratings:

-- Class E at C (sf)
-- Class F at C (sf)
-- Class G at C (sf)

There are no trends as all are assigned credit ratings that do not typically carry a trend in commercial mortgage-backed securities (CMBS) credit ratings.

The credit rating downgrade reflects ongoing interest shortfalls which have exceeded Morningstar DBRS' tolerance for untimely interest to rated bonds. Classes D, E, F and G have not received any interest since February 2024 and as of the August 2024 remittance, the trust has accumulated approximately $4.9 million in interest shortfalls. Morningstar DBRS has limited tolerance for unpaid interest to rated bonds, limited to four remittance periods for the BBB rating category and six remittance periods for the BB and B rating categories. The downgrade of Class D is a result of continued interest shortfalls, stemming from a lack of resolution on the last remaining loan in the pool, Shoppes at Buckland Hills (Prospectus ID#1, 100% of the pool), which is in default. Morningstar DBRS previously downgraded Classes E, F and G to reflect loss expectations upon resolution as well as the expectation that bondholders would be shorted interest given the continued delinquency of Shoppes at Buckland Hills. The credit ratings for these classes was confirmed with this review.

Morningstar DBRS' loss expectations for Shoppes at Buckland Hills is unchanged from the prior credit rating action. The current analysis continues to indicate that disposition of the asset will likely result in a loss to the trust. The loan is secured by 562,600 square feet (sf) within a 1.3 million-sf regional mall in Manchester, Connecticut. The loan has been in special servicing since November 2020 with a receiver appointed in August 2021. The servicer has noted that the receiver is likely to market the property for sale in the near term.

Given that the loan is delinquent and in receivership, and the continued underperformance of the asset, Morningstar DBRS' analysis of this loan included a liquidation scenario based on a stressed haircut to the most recent appraised value. While Morningstar DBRS' loss projection indicates the senior outstanding class will likely be recovered, the disposition timeline is uncertain and, as noted above, Morningstar DBRS' credit ratings are constrained by the expectation of continued unpaid interest prior to repayment.

Morningstar DBRS' credit ratings on the applicable classes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transactions' respective press releases at issuance.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS   
There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.
 
A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024), https://dbrs.morningstar.com/research/437781.

All credit ratings are subject to surveillance, which could result in credit ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by Morningstar DBRS.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is North American CMBS Surveillance Methodology (March 1, 2024), https://dbrs.morningstar.com/research/428798.

Other methodologies referenced in this transaction are listed at the end of this press release.

The credit ratings were initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for these credit rating actions.

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with these credit rating actions.

These are solicited credit ratings.

Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The Morningstar DBRS Long-Term Obligation Rating Scale definition indicates that credit ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

DBRS, Inc.
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Chicago, IL 60602 USA
Tel. +1 312 332-3429

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

-- North American CMBS Multi-Borrower Rating Methodology (March 1, 2024)/North American CMBS Insight Model v 1.2.0.0, https://dbrs.morningstar.com/research/428797
-- Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (June 28, 2024), https://dbrs.morningstar.com/research/435293
-- North American Commercial Mortgage Servicer Rankings (August 23, 2024; https://dbrs.morningstar.com/research/438283/north-american-commercial-mortgage-servicer-rankings)
-- Legal Criteria for U.S. Structured Finance (April 15, 2024), https://dbrs.morningstar.com/research/431205

For more information on this credit or on this industry, visit https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.