DBRS Correction: Institutional Mortgage Securities Canada Inc., Series 2015-6

DBRS Limited (DBRS) corrected a January 31, 2017, press release that did not include language identifying the material deviation for the rating actions taken on Institutional Mortgage Securities Canada Inc., Series 2015-6. The press release has been amended with the correct material deviations identified and is available on the DBRS website.

On January 31, 2017, DBRS Limited (DBRS) confirmed the ratings of the Commercial Mortgage Pass-Through Certificates (the Certificates), Series 2015-6 issued by Institutional Mortgage Securities Canada Inc., Series 2015-6 (the Trust) as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class X at AAA (sf)
-- Class B at AA (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. DBRS does not rate the first loss piece, Class H.

The rating confirmations reflect that the transaction’s overall current performance remains stable. The collateral consists of 47 fixed-rate loans secured by 64 commercial properties. As of the January 2017 remittance, all 47 loans remain in the pool, with an aggregate outstanding principal balance of approximately $310 million, representing a collateral reduction of 4.8% since issuance due to scheduled loan amortization. To date, 46 loans (98.5% of the pool) have reported YE2015 net cash flow (NCF) figures. According to these figures, the transaction had a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 1.53 times (x) and 10.5%, respectively, compared with the DBRS UW figures of 1.42x and 9.3%, respectively. The transaction is concentrated by loan borrower, as 37 loans (66.0% of the pool) have related borrowers to one or more loans within the pool. The most significant concentration of related borrowers is associated with Econo-Malls Management Corporation, which is the borrower of 11 loans (14.9% of the pool) within the pool. Transaction-wide, 18 loans (52.0% of the pool) have either full or partial recourse to their respective borrowers.

Based on the YE2015 reporting, the Top 15 loans reported a WA DSCR of 1.36x, compared with the DBRS UW figure of 1.40x, reflective of a WA amortizing NCF decline of 1.1%. There are seven loans (25.9% of the pool) in the Top 15 exhibiting NCF declines compared with the DBRS UW figures, with declines ranging from 0.9% to 64.8%. The loan with the largest NCF decline, the Comfort Inn & Suites Airdrie loan (Prospectus ID#9, 3.4% of the pool), is secured by a 103-key, limited-service hotel, located in the town of Airdrie, Alberta, approximately 32 kilometers north of the Calgary CBD. As of YE2015, the loan reported a DSCR of 1.21x, compared to the DBRS UW figure of 1.64x. The decline in performance is predominantly tied to the recent downturn in the energy market, as the property’s demand is largely dependent on corporate customers within the oil and gas industry. As a result of a drop in demand, both occupancy and daily rates have fallen well below issuance levels within the market. As of January 2017, the property reported a trailing 12-month occupancy rate and average daily rate (ADR) of 50.6% and $110.0, respectively, compared to 80.9% and $127.0 in September 2014.

As of the January 2017 remittance, there are no loans in special servicing and one loan (1.7% of the pool) on the servicer’s watchlist. The St. Laurent Industrial loan (Prospectus ID#20) is secured by a 322,360 square foot industrial building located in Montréal, Québec. The loan was placed on the watchlist with the June 2016 remittance because of a drop in occupancy. As of YE2015, the property was 56.0% occupied, down from 65.0% at issuance, resulting in a low DSCR of 1.02x; however, the servicer has confirmed that occupancy increased to 75.9% as of November 2016. Given the rise in occupancy and limited near-term rollover, performance is expected to stabilize within the near future.

At issuance, DBRS assigned an investment-grade shadow rating to three loans, South Hill Shopping Centre (Prospectus ID#2, 6.6% of the pool), U-HAUL SAC 3 Portfolio (Prospectus IDs#33, 35, 36, 37, 41, 43, 44, 45, 46 and 47, 5.7% of the pool) and Markham Town Square (Prospectus ID#8, 3.8% of the pool). DBRS has today confirmed that the performance of these loans remain consistent with the investment-grade loan characteristics.

DBRS has provided updated loan-level commentary and analysis for larger and/or pivotal watchlisted and specially serviced loans, as well as for the largest 15 loans in the pool, in the DBRS CMBS IReports platform. To view these and future loan-level updates provided as part of DBRS’s ongoing surveillance for this transaction, please log into DBRS CMBS IReports at www.ireports.dbrs.com.

The rating assigned to Class G materially deviates from the higher rating implied by the quantitative results. The deviation is warranted because sustainability of loan trends has not yet been demonstrated.

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.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodologies are North American CMBS Rating Methodology (March 2016) and CMBS North American Surveillance (December 2015), which can be found on our website under Methodologies.

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