DBRS Confirms All Classes of CD 2016-CD1 Mortgage Trust

DBRS Limited (DBRS) confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2016-CD1 issued by CD 2016-CD1 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-SB at AAA (sf)
-- Class A-M at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (sf)
-- Class X-B at A (high) (sf)
-- Class C at A (sf)
-- Class X-C at BBB (sf)
-- Class D at BBB (low) (sf)
-- Class X-D at BB (sf)
-- Class E at BB (low) (sf)
-- Class X-E at B (high) (sf)
-- Class F at B (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction. The collateral consists of 32 fixed-rate loans secured by 58 commercial properties. As of the August 2017 remittance, there has been a collateral reduction of 0.6% as a result of scheduled loan amortization. Five loans, representing 33.8% of the pool, including four of the largest 15 loans, are structured with full-term interest-only (IO) payments. An additional 11 loans, representing 34.9% of the pool, have partial IO periods ranging from 12 to 48 months. As of the August 2017 remittance, these loans have remaining IO periods ranging from four to 34 months. Loans representing 59.1% of the current pool balance reported YE2016 cash flow figures. These loans reported a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 1.78 times (x) and 9.2%, respectively, compared with the DBRS WA DSCR and WA debt yield for the whole portfolio of 2.20x and 11.1%, respectively, at issuance. The largest 15 loans in the pool reported a WA DSCR and debt yield of 2.00x and 9.4%, respectively.

As of the August 2017 remittance, there are no loans on the servicer’s watchlist.

At issuance, DBRS shadow-rated the following loans investment grade: 10 Hudson Yards (Prospectus ID#1, 9.3% of the pool balance), Westfield San Francisco Centre (Prospectus ID#3 – 8.6% of the pool balance), Gas Company Tower & World Trade Center Parking Garage (Prospectus ID#8 – 5.7% of the pool balance) and Vertex Pharmaceuticals HQ (Prospectus ID#9 – 4.3% of the pool balance). DBRS confirmed that the performance of these loans remains consistent with investment-grade characteristics.

The rating assigned to Class F materially deviates 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. The deviations are warranted because the sustainability of loan performance trends was not demonstrated.

DBRS has provided updated loan-level commentary and analysis for the largest 15 loans in the pool 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 into 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 methodology is CMBS North American Surveillance, 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.