DBRS Confirms Ratings on Morgan Stanley Bank of America Merrill Lynch Trust 2016-C32

DBRS, Inc. (DBRS) confirmed the ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2016-C32 issued by Morgan Stanley Bank of America Merrill Lynch Trust 2016-C32:

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

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction, which has remained generally in line with DBRS’s expectations since issuance. The collateral consists of 56 fixed-rate loans secured by 76 commercial and multifamily properties. The original trust balance was approximately $907.0 million, and as at the November 2017 remittance, all loans remain in the pool with an aggregate principal balance of $902.6 million, representing a collateral reduction of 0.5% since issuance. The weighted-average (WA) DBRS Term Debt Service Coverage Ratio (DSCR) and WA DBRS Debt Yield for the pool at issuance were 1.93 times (x) and 9.7%, respectively. The largest 15 loans in the pool collectively represent 64.0% of the transaction balance. Based on the most recent financial reporting provided, 12 loans in the top 15, representing 49.0% of the pool balance, have exhibited WA net cash flow growth of 4.9% over the DBRS issuance WA DSCR of 1.92x.

Three loans, representing 2.7% of the pool balance, are on the servicer’s watchlist. One loan is flagged for an outstanding deferred maintenance item, one is flagged for damages caused by Hurricane Irma and the remaining loan was added to the watchlist because of a decline in cash flow driven by a rent abatement provided in early 2017.

Classes X-A, X-B and X-D are interest-only (IO) certificates that reference a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated reference tranche and may be 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 and specially serviced 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.

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.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

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