Fitch Ratings has downgraded two classes and affirmed 14 classes of Citigroup Commercial Mortgage Trust (CGCMT) 2018-B2 Commercial Mortgage Pass-Through Certificates.

The Rating Outlook on classes D and X-D have been revised to Negative from Stable.

RATING ACTIONS

Entity / Debt

Rating

Prior

CGCMT 2018-B2

A-1 17327FAA4

LT

AAAsf

Affirmed

AAAsf

A-2 17327FAB2

LT

AAAsf

Affirmed

AAAsf

A-3 17327FAC0

LT

AAAsf

Affirmed

AAAsf

A-4 17327FAD8

LT

AAAsf

Affirmed

AAAsf

A-AB 17327FAE6

LT

AAAsf

Affirmed

AAAsf

A-S 17327FAF3

LT

AAAsf

Affirmed

AAAsf

B 17327FAG1

LT

AA-sf

Affirmed

AA-sf

C 17327FAH9

LT

A-sf

Affirmed

A-sf

D 17327FAJ5

LT

BBB-sf

Affirmed

BBB-sf

Page

of 2

VIEW ADDITIONAL RATING DETAILS

KEY RATING DRIVERS

Increased Loss Expectations: The downgrades and Negative Outlooks reflect the increased loss expectations since Fitch's prior rating action, due to performance declines from the seven Fitch Loans of Concern (FLOCs; 16.8%), primarily the Westin Tysons Corner loan (4.3%), 3rd & Pine Seattle Retail & Parking (3.4%), One Newark Center (3%) and Warwick Mall (1.7%). Fitch's current ratings reflect a base case loss of 6.50%.

Largest Contributors to Loss: The largest contributor to loss is the Westin Tysons Corner loan (4.4%), which is secured by a 407-room full service hotel located in Falls Church, VA in the Tysons Corner submarket of Washington D.C. The property cash flow has declined significantly and has not stabilized since the pandemic. The servicer reported NOI debt service coverage ratio (DSCR) was 0.66x as of TTM September 2022 and -0.50x at YE 2020 compared with 1.29x at YE 2019. Fitch modeled a loss of approximately 22%, which reflects a value of $86,000 per key.

The second largest contributor to loss is the 3rd & Pine Seattle Retail & Parking loan (3.4% of the pool), which is secured by a leasehold interest in a parking lot/retail property located in an urban infill location within the downtown Seattle, WA CBD. The loan is designated as a FLOC due to a substantial decline in cash flow due to declines in parking income and vacancy. The decrease in parking income is attributed to lower demand for transient parking. The largest retail tenant (94% of the retail space) vacated in September 2020. According to servicer updates, the retail space is still vacant. The servicer reported YE 2021 NOI DSCR was -0.1xcompared with 1.27x at YE 2020 and 1.77x at YE 2019. Fitch modeled a loss of approximately 19% based on a 20% stress to the YE 2019 NOI.

The third largest contributor to loss is the One Newark Center loan (3%), secured by a portion of a 418,000-sf office property located in the Newark CBD. The loan's collateral consists of floors 6-22 of an office building and an attached parking garage. Floors 1-5 are owned and occupied by Seton Hall Law School.

Occupancy declined to 68% as of June 2022 from 94% in December 2020 due to a number of tenants vacating in 2021 and 2022. Global Crossing (8% of NRA) vacated upon its 2021 lease expiration, while Sedgwick (6% of NRA) vacated prior to its 2025 lease expiration. Additionally, K&L Gates reduced its space to 26,074 sf (6.2% of NRA) from 52,148 sf (12.5% of NRA).

The loan has remained current, however NOI DSCR is low at 1.07x as of YTD June 2022, down from 1.33x at YE 2021, 2.30x at YE 2020, and 2.87x at YE 2019. Fitch's analysis includes a 25% stress and 9% cap rate to the YE 2021 NOI to reflect declining occupancy, upcoming lease rollover and high submarket vacancy resulting in a 24% modeled loss.

The next largest increase in loss since the last rating action is the Warwick Mall loan (1.7%), which is secured by an approximately 588,000-sf regional mall located in Warwick, RI. The loan sponsorship consists of Bliss Properties, Lane Family Trust and Mark T. Brennan. This FLOC was flagged for its secondary market regional mall location, continued performance recovery from the pandemic and refinance concerns. The mall reopened in June 2020 after being closed in March due to the pandemic.

Non-collateral anchors include Macy's and Target. Major collateral tenants include JCPenney (23.4% NRA expiring March 2030), Jordan's Furniture (19.3%, extending for five years through December 2026), Nordstrom Rack (6.4%, November 2022) and Old Navy (3.8%, January 2026). Showcase Cinema (9.7%) vacated when its lease expired in April 2021); however, the borrower has since re-leased the space to Apple Cinemas on a 15-year term which began in November 2021, with the theater opened in March 2022.

Occupancy was 91% as of March 2022, compared with 94% occupied in June 2021. Recent tenant sales were requested from the master servicer, but not provided; the latest available inline sales were $499 psf as of TTM June 2017. Fitch's base case loss has increased to 31%, reflecting a 20% cap rate and 5% stress to the YE 2021 NOI, and factors a higher loss recognition due to anticipated refinance concerns at maturity.

Minimal Change to Credit Enhancement (CE): As of the December 2022 distribution date, the pool's aggregate principal balance was reduced by 2.7% to $1.03 billion from $1.06 billion at issuance. Three loans (3.8%) are defeased. There have been $568 thousand in realized losses to date, and interest shortfalls are currently affecting only the non-rated class. Twenty loans (48.4% of pool) are full-term, IO and four loans (9%) remain in their partial IO periods. The majority of the pool (82.8%) matures in 2028 and 6.8% matures in 2023 and 10.4% in 2027.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to negative rating action/downgrade:

Sensitivity Factors that lead to downgrades include an increase in pool level losses from underperforming or specially serviced loans erode CE.

Downgrades to classes B and C are not expected due to the generally stable pool performance and expected continued paydown; however, downgrades to these classes may occur should performance of the FLOCs continue to deteriorate.

Downgrades to class D would occur if loss expectations increase significantly and/or if CE is eroded due to realized losses, or if the performance of the FLOCs fail to stabilize.

Further downgrades to the distressed classes E and F would occur if losses are realized and/or if losses become more certain.

Fitch has identified both a baseline and a worse-than-expected, adverse stagflation scenario based on fallout from the Russia-Ukraine war, whereby growth is sharply lower amid higher inflation and interest rates. Even if the adverse scenario should play out, Fitch expects minimal impact to ratings performance, indicating few rating or Outlook changes. However, for some transactions with concentrations in underperforming retail exposure, the ratings impact may be mild to modest, indicating some changes on sub-investment-grade notes.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

Upgrades to the 'AA-sf' and 'A-sf' category would likely occur with significant improvement in CE and/or defeasance; however, adverse selection and increased concentrations or the underperformance of larger loans and FLOCs could cause this trend to reverse. Classes would not be upgraded above 'Asf' if there is likelihood for interest shortfalls.

The 'BBB-sf' and 'CCCsf' rated classes are unlikely to be upgraded absent significant performance improvement from Westin Tysons Corner loan, 3rd & Pine Seattle Retail & Parking, One Newark Center and Warwick Mall.

Best/Worst Case Rating Scenario

International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.

USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10

Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg

Additional information is available on www.fitchratings.com

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