DBRS Confirms All Classes of LSTAR Commercial Mortgage Trust 2015-3

DBRS Limited (DBRS) has today confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2015-3 issued by LSTAR Commercial Mortgage Trust 2015-3 as follows:

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

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction. As of the May 2017 remittance, the transaction has experienced a collateral reduction of 10.4% since issuance as a result of loan prepayments and loan liquidations as 24 of the original 62 loans have paid out or have been disposed out of the trust ahead of their respective maturity dates. As of the May 2017 remittance report, total losses to the trust for the liquidated loans of approximately $20,000 have been contained to the unrated Class G certificates. According to the most recent reporting, the remaining loans in the pool have a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 1.54 times (x) and 8.3%, respectively. The transaction is concentrated as the largest 12 loans represent 93.6% of the current pool balance. Of those 12 loans, 11 are reporting YE2016 financials, with a WA DSCR of 1.58x and debt yield of 8.7%.

The 12 largest loans in the pool were newly originated at issuance, while the other 26 loans are seasoned loans that were purchased by the loan seller from Fannie Mae or were originally part of the now retired LASL 2006-MF2 and LASL 2006-MF3 commercial mortgage-backed securities (CMBS) transactions. Of the 24 loans that have prepaid to date, one loan was newly originated at issuance and the remaining loans were seasoned loans. The newly originated loans are secured by hospitality, retail, office and multifamily properties, while the seasoned loans are secured by multifamily and manufactured housing community properties. The seasoned loans are of granular concentration, as the largest seasoned loan represents 0.4% of the current pool balance. All of the remaining seasoned loans, representing 6.4% of the current pool balance, are fully amortizing.

As of the May 2017 remittance, there are three loans in special servicing and 17 loans on the servicer’s watchlist, representing 0.7% and 12.7% of the pool, respectively. The loans on the servicer’s watchlist have been flagged because of items of deferred maintenance, lack of recent financials provided or a decrease in financial performance since issuance. One loan in special servicing was transferred for payment default while the remaining two loans were transferred due to non-monetary default.

DBRS has provided updated loan-level commentary and analysis for the largest 12 loans in the pool and one specially serviced loan in the DBRS 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 at www.ireports.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 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.