DBRS Confirms All Classes of Canadian Commercial Mortgage Origination Trust 2015-3

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

-- Class A-1 at AAA (sf)
-- Class A-J 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) (sf)
-- Class F at BB (sf)
-- Class G at B (sf)

The trends on all classes are Stable, excluding Class G, to which DBRS maintained a Negative trend because of the ongoing concerns surrounding the Clearwater Suites loan (Prospectus ID#7, 3.9% of the current pool balance), which is secured by a hotel property located in Fort McMurray, Alberta and has been reporting depressed cash flows since YE2015. The loan is current and is on the servicer’s watchlist for a low DSCR.

The rating confirmations reflect the stable performance of the transaction, which overall has remained in line with DBRS’s expectations since issuance. As of the July 2017 remittance, there has been a collateral reduction of 5.1% as a result of scheduled amortization. Loans representing 77.7% of the current pool balance show a YE2016 analysis in the servicer’s reporting. Those loans reported a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 1.46 times (x) and 8.9%, respectively. The DBRS WA DSCR and WA debt yield for the pool at issuance were 1.41x and 8.3%, respectively. The largest 15 loans in the pool represent 63.6% of the current pool balance, and 13 of those loans, representing 58.5% of the current pool balance, show a YE2016 analysis, with a WA net cash flow growth of 10.9% over the DBRS issuance figures, and a WA DSCR and WA debt yield for those loans of 1.61x and 9.6%, respectively.

As of the July 2017 remittance, there were two loans on the servicer’s watchlist, representing 4.8% of the current pool balance, including the previously mentioned Top 15 loan, Clearwater Suites.

The ratings assigned to Classes F and X materially deviate from the higher rating 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. Specifically for Class F, the deviation is warranted because the sustainability of loan performance trends was not demonstrated. As for Class X, the deviation is warranted because consideration was given for actual loan, transaction and sector performance, where a rating based on the lowest-rated notional class may not reflect the observed risk.

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 into www.ireports.dbrs.com.

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 methodology is CMBS North American Surveillance (March 2017), 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.