DBRS Confirms All Classes of Real Estate Asset Liquidity Trust, Series 2016-1 with Stable Trends

DBRS Limited (DBRS) has today confirmed the ratings for all classes of Commercial Mortgage Pass-Through Certificates, Series 2016-1 (the Certificates) issued by Real Estate Asset Liquidity Trust, Series 2016-1 (the Trust) as follows:

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

All trends are Stable.

The rating confirmations reflect the overall stable performance exhibited by the transaction since issuance in 2016. At issuance, the collateral consisted of 55 fixed-rate loans secured by 91 commercial properties. As of the May 2017 remittance, all loans remained in the pool with an aggregate principal balance of $391.7 million, representing a collateral reduction of 2.3% due to scheduled loan amortization. To date, only eight loans (7.7% of the pool) have reported 2016 net cash flow figures.

The pool is fairly concentrated by property type, as 26 loans (representing 39.9% of the pool) are secured by retail properties, 11 loans (23.1% of the pool) are secured by multifamily properties, nine loans (17.6% of the pool) are secured by industrial properties and five loans (14.7% of the pool) are secured by office properties; in total representing 95.3% of the pool. By geographical location, the pool is most concentrated in central Canada, as the largest concentration by province is Ontario with 34 loans (55.8% of the pool), followed by Québec with eight loans (17.6% of the pool) and British Columbia with nine loans (10.0% of the pool). The pool is rather diverse in concentration by loan size, as the top ten and top 15 loans only represent 43.7% and 56.0% of the pool, respectively. The transaction benefits from 27 loans (50.7% of the pool) having some degree of recourse to their respective sponsors.

As of the May 2017 remittance, there are no loans on the servicer’s watchlist or in special servicing.

At issuance, DBRS shadow-rated the Toronto Congress Centre (Prospectus ID#2, 5.4% of the pool) as investment grade. DBRS confirms that the performance of this loan remains consistent with investment-grade loan characteristics.

The rating assigned to Class X materially deviate from the lower ratings implied by the quantitative results. 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 results that is a substantial component of a rating methodology; in this case, the deviation is warranted on the notional class as it is less likely to be adversely affected by collateral credit losses supported by historical performance of Canadian commercial mortgage-backed securities (CMBS), in which total losses in the sector are less than 0.01% since inception in 1998.

DBRS will provide updated loan-level commentary and analysis for the largest ten loans in the pool in the DBRS CMBS IReports platform once update financials become available. Registration is free. To view these and future loan-level updates provided as part of DBRS’s ongoing surveillance for this transaction, please register or log in at www.ireports.dbrs.com.

For more information on these rating actions, please 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 In¬strument 25-101 Designated Rating Organizations are hereby in¬corporated 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 principal methodologies are North American CMBS Rating Methodology (January 2017) and CMBS North American Surveillance (December 2016), which can be found on dbrs.com under Methodologies.

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