DBRS Confirms FREMF 2015-K51 Mortgage Trust, Series 2015-K51

DBRS Limited (DBRS) confirmed the ratings on the following classes of Multifamily Mortgage Pass –Through Certificates, Series 2015-K51:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class B at A (low) (sf)
-- Class C at BBB (sf)
-- Class X-1 at AAA (sf)
-- Class X2-A at AAA (sf)
-- Class X2-B at BBB (high) (sf)

All trends are Stable.

The rating confirmations reflect the overall performance of the transaction, which has remained in line with DBRS’s expectations since issuance. The collateral consists of 99 fixed-rate loans secured by 99 multifamily properties and as of the November 2017 remittance, there has been a collateral reduction of 0.6% since issuance as a result of scheduled amortization as all loans remain in the pool. The DBRS weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield at issuance were 1.43 times (x) and 8.0%, respectively. The largest 15 loans in the pool collectively represent 36.2% of the transaction balance and based on YE2016 financials, these loans are reporting a WA net cash flow (NCF) growth of 16.3% over the DBRS NCF figures, with a WA DSCR and debt yield of 1.82x and 9.3%, respectively.

There are nine loans on the servicer’s watchlist, representing 6.5% of the current pool balance, as of the November 2017 remittance. All loans are current and have been flagged for various reasons, including declines in financial performance, casualty events or deferred maintenance. Additionally, the Villages at Meyerland loan, representing 3.0% of the current pool balance, has been modified with a forbearance period as it appears the property was damaged by Hurricane Harvey as the subject is located in Houston, Texas. A $3.0 million repairs and maintenance reserve has been funded, likely with insurance proceeds. DBRS is awaiting an update from the servicer to confirm the reason for the forebearance agreement and the expected time needed to complete any repairs.

Classes X-1, X2-A and X2-B are interest-only (IO) certificates that reference a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated reference tranche adjusted upward by one notch if senior in the waterfall.

All ratings will be subject to ongoing surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed or discontinued by DBRS.

DBRS has provided updated loan-level commentary and analysis for larger and/or pivotal watchlisted loans in the transaction, as well as the Top 15 loans, in the DBRS Viewpoint 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 DBRS Viewpoint at viewpoint.dbrs.com.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is CMBS North American Surveillance, which can be found on dbrs.com under Methodologies. For a list of the Structured Finance related methodologies that may be used during the rating process, please see the DBRS Global Structured Finance Related Methodologies document on www.dbrs.com. Please note that not every related methodology listed under a principal Structured Finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.
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 under Related Documents or by contacting us at info@dbrs.com.

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

The rated entity or its related entities did participate in the rating process for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

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