DBRS Confirms Ratings of JPMBB 2015-C33 Commercial Mortgage Trust, Stable Trends

DBRS, Inc. (DBRS) has today confirmed the Commercial Mortgage Pass-Through Certificates, Series 2015-C33 (the Certificates), issued by JPMBB 2015-C33 Commercial Mortgage Trust as follows:

-- 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-C at AAA (sf)
-- Class X-D at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (low) (sf)
-- Class D-1 at BBB (sf)
-- Class D-2 at BBB (low) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (sf)
-- Class F at BB (low) (sf)
-- Class G at B (low) (sf)

All trends are Stable.

The rating confirmations reflect the transaction’s current performance, which remains in line with DBRS’s expectations at issuance. The collateral consists of 64 fixed-rate loans secured by 89 commercial properties. As of the October 2016 remittance, the pool had an aggregate outstanding balance of approximately $757.5 million, representing a collateral reduction of 0.6% since issuance because of scheduled loan amortization. The pool benefits from a high concentration of loans secured by properties in urban (33.6% of the current pool) and suburban (50.8% of the current pool) markets. As of the October 2016 remittance, there are two loans, comprising 1.3% of the current pool, on the servicer’s watchlist with no loans in special servicing. Both loans are being monitored for non-performance-related issues as the servicer has reported healthy coverage metrics for each loan.

The largest loan in the pool, 32 Avenue of the Americas (Prospectus ID#1; 16.5% of the current pool), is secured by a 1.1 million square foot (sf) office property and data center located in the Tribeca District of Manhattan. The loan is full interest-only for the entire ten-year term. The subject has averaged a high occupancy rate of 96.0% from 2005 to 2015. According to the June 2016 rent roll, the property has an occupancy rate of 99.6% with an average rental rate of $56.37 per square foot (psf). Only 2.3% of the net rentable area (NRA) is set to roll in the next 12 months. The property is occupied by CenturyLink, Inc. (14.2% of NRA), whose lease expires in August 2020; AMFM Operating Inc. (10.0% of NRA) with a lease until September 2022; and DENTSU Holdings Inc. (8.5% of NRA) with a lease until September 2021. The loan is reporting strong financials with a YE2015 debt service coverage ratio (DSCR) of 1.87x and a Q2 2016 DSCR of 1.89x.

The New Center One loan (Prospectus ID#9; 2.5% of the current pool) is secured by a 506,966 sf office located in the New Center submarket (approximately three miles northwest of the Detroit central business district), which is considered a hub for government, health care and education. The property was built in 1980 and purchased in 2003 by the borrower. This property is of significantly newer vintage than the two adjacent office buildings (built in 1929 and 1931), which are also owned by the borrower and are connected to the subject via skywalk. The loan securing the adjacent properties was transferred to special servicing and the properties were foreclosed in February 2015, in which the borrower was also involved. The subject will benefit from the new M-1 Rail system that is currently under construction and is set to open in 2017, which will connect the New Center Submarket with downtown Detroit. The subject property will be in close proximity to the main terminal for the new rail system and, according to the servicer, this will allow for greater demand for the subject’s parking lot as it has already increased its parking lot rate to $80.00 per month in anticipation of the M-1 Rail opening.

The loan is reporting healthy Q2 2016 financials with a DSCR of 1.76x. According to the March 2016 rent roll, the property was 76.6% occupied with an average rental rate of $14.80 psf, which compares similarly with the July 2015 occupancy rate of 77.1%. The largest tenant is Henry Ford Health Services, occupying 31.3% of NRA across multiple leases. Two leases, totaling 11.9% of NRA, are set to expire in January and April 2017, respectively; however, according to the servicer, the tenant has renewed both leases with extensions to January 2020 and April 2022, respectively, with scheduled rent steps throughout the respective lease terms. A cash sweep did activate as the lease renewals were not secured by the mandated period, but funds have since been released back to the borrower as the leases are now signed.

The rating assigned to Class G materially deviates from the higher rating 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 rating reflects the sustainability of loan performance trends not demonstrated and, as such, was reflected in the rating.

For more information on this transaction and supporting data, please log into 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.

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 Methodology (October 2016), which can be found on our website under Methodologies.