DBRS Confirms All Classes of Real Estate Asset Liquidity Trust, Series 2015-1

DBRS Limited (DBRS) has today confirmed the ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2015-1 issued by Real Estate Asset Liquidity Trust, Series 2015-1:

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

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

The rating confirmations reflect the overall stable performance of the transaction since issuance in May 2015. The transaction consists of 46 fixed-rate loans secured by 46 commercial properties. The pool has experienced a collateral reduction of 5.1% since issuance as a result of scheduled amortization, with all of the original 46 loans outstanding. The most recent financials available at the time of review were YE2015 financials, which reported a weighted-average (WA) debt service coverage ratio (DSCR) of 1.64 times (x) and a WA debt yield of 10.8% for the pool. The DBRS WA DSCR and WA debt yield for the pool at issuance were 1.50x and 9.3%, respectively.

As of the May 2017 remittance, there was one loan, representing 2.2% of the pool balance, on the servicer’s watchlist, and no loans in special servicing. The York Industrial Leduc loan (Prospectus ID#15, 2.2% of the current pool) was added to the servicer’s watchlist, as the largest tenant, Raptor Manufacturing, which occupied 54.5% of the net rentable area at issuance, went bankrupt and vacated the property. As such, the subject is currently 45.5% occupied by one tenant on a lease through October 2019.

The U-Haul SAC 3 Portfolio loan (Prospectus ID#35-38, 41-46; 3.7% of the current pool) is secured by a portfolio of ten individual loans backed by self-storage properties totalling 4,985 units across ten different cities in Ontario. At issuance, DBRS shadow-rated this loan as investment grade. DBRS confirms with this review that the performance of this loan remains consistent with investment-grade loan characteristics.

DBRS has provided updated loan-level commentary and analysis for larger and/or pivotal watchlisted loans, as well as for the largest ten loans in the pool, in the DBRS commercial mortgage-backed securities (CMBS) IReports platform. 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 to DBRS CMBS IReports at www.ireports.dbrs.com.

The ratings 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 CMBS, in which total losses in the sector are less than 0.01% since inception in 1998.

Notes:
All figures are in Canadian 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 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.