DBRS Confirms All Classes of COMM 2015-CCRE27 Mortgage Trust

DBRS Limited (DBRS) has today confirmed the ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2015-CCRE27 issued by COMM 2015-CCRE27 Mortgage Trust:

-- 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-SB at AAA (sf)
-- Class A-M at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class X-C 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 (sf)
-- Class C at A (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (low) (sf)
-- Class F at B (high) (sf)
-- Class G at B (low) (sf)

All trends are Stable. DBRS does not rate the first loss piece, Class H.

The rating confirmations reflect the pool’s overall performance. At issuance, the transaction consisted of 65 loans secured by 96 commercial and multifamily properties. The pool has since experienced 0.5% in collateral reduction as a result of scheduled amortization, with all of the original 65 loans remaining in the pool. The pool reported a weighted-average (WA) debt service coverage ratio (DSCR) of 1.49 times (x) and a WA debt yield of 8.8% based on 80.4% of the pool that reported YE2015 financials. Comparatively, the underwritten (UW) WA DSCR and WA debt yield were 1.61x and 8.8%, respectively, for the entire pool.

As at the October 2016 remittance, there is one loan in special servicing, representing 0.4% of the current pool balance and one loan on the servicer’s watchlist, representing 4.1% of the current pool balance. Both of these loans are further discussed below.

The Bonita Springs Self Storage loan (Prospectus ID#57), representing 0.4% of the current pool balance, is secured by a 527 unit self-storage facility located in Bonita Springs, Florida. This loan transferred to the special servicer in April 2016 for imminent default because of the poor condition of the roof that led to the cancellation of the insurance policy effective January 2016. According to the servicer, the property was acquired by the borrower in its damaged condition and an insurance policy was issued with the expectation that the roof would be repaired; however, the insurance policy was cancelled in January 2016, when the repairs had not yet been completed. It has been confirmed by the servicer that the borrower is in the process of completing the repairs with an expected completion date of December 2016. As such, a new wind and hail insurance policy was issued effective May 2016. A loan modification is also being negotiated which would establish a reserve that must be funded for any remaining anticipated roof repair expenses. The loan is expected to be returned to the Master Servicer when all repairs are completed and the terms of the potential modification are met. According to the site inspection dated May 2016, it was noted that the overall property rating was below average; however, it was evident numerous repairs had been made to the roof, including white sealant paint being applied on the roof. Occupancy at the subject has not been negatively affected by the damaged roof as according to the March 2016 rent roll, the property was 87.5% occupied, which compares similarly with the July 2015 occupancy of 89.0%. Based on the most recent financials, the loan reported a YE2015 DSCR of 1.05x, representing a decline from the DBRS UW DSCR of 1.25x. Given the ongoing repairs at the subject and the decreased DSCR, the loan was modeled with an increased probability of default.

The Midwest Shopping Center Portfolio loan (Prospectus ID#6), representing 4.8% of the current pool balance, is secured by six anchored retail properties that are cross-collateralized and cross-defaulted. The properties are located across four states, with two each in Iowa and Illinois and one each in Oklahoma and Missouri. Property anchors across the portfolio include Home Depot, Marshalls and Hobby Lobby, with Home Depot being the largest single-tenant exposure across the portfolio with two individual locations. This loan was placed on the servicer’s watchlist because of a low DSCR. Based on the most recent financial reporting, the annualized Q2 2016 DSCR was 1.01x, decreasing from the YE2015 DSCR of 1.15x and the DBRS UW DSCR of 1.37x. The decrease is entirely attributable to a 26.0% decrease in the expense reimbursements that were reported. It has been confirmed by the servicer that the reimbursement revenue was not being properly reported by the borrower and it is expected that this line item is in line with issuance. Given that base rent and operating expenses have remained in line with expectations at issuance, it is expected that the DSCR will improve. Occupancy has also been stable, at 90.5% according to the June 2016 rent roll, compared with the August 2015 occupancy of 90.2%.

At issuance, DBRS shadow-rated one loan, 11 Madison Avenue (Prospectus ID#1, representing 7.6% of the current pool balance), as investment grade. DBRS has today confirmed that the performance of this loan remains consistent with investment-grade loan characteristics.

The ratings assigned to Classes E and F materially deviate from the higher ratings implied by the quantitative model. DBRS considers a material deviation to be a rating differential of three or more notches between the assigned rating and the rating implied by the quantitative model that is a substantial component of a rating methodology; in this case, the assigned ratings reflect the sustainability of loan performance trends not demonstrated.

For more information on this transaction and supporting data, please login to DBRS CMBS IReports, www.ireports.dbrs.com. DBRS continues to monitor this transaction monthly, with periodic updates provided in the DBRS CMBS IReports platform.

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 (March 2016) and CMBS North American Surveillance (October 2016), which can be found on our website under Methodologies.