DBRS Confirms All Classes of MSBAM 2015-C20

DBRS Limited (DBRS) has today confirmed the ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2015-C20 (the Certificates) issued by Morgan Stanley Bank of America Merrill Lynch Trust 2015-C20:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-S at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class X-D at AAA (sf)
-- Class X-E at AAA (sf)
-- Class X-F at AAA (sf)
-- Class B at AA (low) (sf)
-- Class PST at A (low) (sf)
-- Class C at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (low) (sf)
-- Class F at B (low) (sf)

All trends are Stable. DBRS does not rate the first loss piece, Class G. The Class PST certificates are exchangeable for the Classes A-S, B and C certificates (and vice versa). Classes D, E, F, X-B, X-D, X-E and X-F are privately placed.

The rating confirmations reflect the overall performance of the transaction. The transaction consists of 88 fixed-rate loans secured by 102 commercial properties. Since issuance, the transaction has experienced collateral reduction of 0.6% as a result of scheduled amortization, with all of the original 88 loans remaining in the pool. Given the early 2015 closing date, updated financial reporting for the pool is limited. Approximately 21.7% of the loans are reporting YE2014 financials; however, this data reflects performance prior to securitization. For those loans, the weighted-average (WA) DSCR was 1.40 times (x) with a WA debt yield of 8.3%. At the time of this DBRS review, 18.2% of the pool was reporting 2015 cash flows (with most of them reporting a Q3 figure), and for those loans, the annualized WA DSCR was 1.51x, with a WA debt yield of 9.6%.

As of the January 2016 remittance, there is one loan on the servicer’s watchlist, representing 0.5% of the current pool balance, and there are no loans in special servicing.

The loan on the watchlist is Prospectus ID#68, Presidio Office Building. This loan is secured by an 81,222 square foot four-story Class A office building located in Colorado Springs, Colorado. The building is architecturally unique and is located in close proximity to restaurants and retail from a neighboring mall. This loan is on the watchlist due to upcoming rollover, including the largest tenant. The property was 79.0% occupied at issuance. According to Q2 2015 reporting, the property was 76.8% occupied with leases representing 11.0% of net rentable area (NRA) expiring in 2015. DBRS has requested a copy of the Q2 2015 rent roll used to calculate the occupancy rate shown in the servicer’s reporting, but that file has not been received to date. According to the most recent rent roll from issuance dated November 2014, the largest tenant, eSuite 360, representing 9.5% of NRA, had a lease set to expire in October 2016. According to CoStar, the property is 80.4% occupied and the largest space, which matches the square footage of eSuite 360, is currently occupied by Executive Systems, Inc. DBRS has requested a leasing update from the servicer. The asking rental rates for the available space as shown on CoStar is $13.00 to $14.00 NNN, which is in line with the average rental rates in place at issuance of $13.45 per square foot. According to the most recent financials available, the annualized Q2 2015 DSCR is 1.74x, which is higher than the DBRS underwritten DSCR of 1.23x. Given that occupancy is in line with issuance and cash flows are strong, DBRS expects the loan to be removed from the watchlist once updated rent rolls are provided.

DBRS continues to monitor this transaction in its Monthly CMBS Surveillance Report with additional information on the DBRS viewpoint for this transaction, including details on the largest loans in the pool and loans on the servicer’s watchlist. The January 2016 Monthly CMBS Surveillance Report for this transaction will be published shortly. If you are interested in receiving this report, contact us at info@dbrs.com.

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

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodologies are North American CMBS Rating Methodology (June 2015) and CMBS North American Surveillance (December 2015), which can be found on our website under Methodologies.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.