DBRS Confirms Ratings of COMM 2016-CCRE28 Mortgage Trust, Stable Trends

DBRS Limited (DBRS) confirmed the ratings for all classes of Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28 (the Certificates) issued by COMM 2016-CCRE28 Mortgage Trust (the 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-HR at AAA (sf)
-- Class A-M at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-HR at AAA (sf)
-- Class XP-A at AAA (sf)
-- Class B at AA (sf)
-- Class X-B at A (high) (sf)
-- Class C at A (sf)
-- Class D at BBB (high) (sf)
-- Class X-C at BBB (sf)
-- Class E at BBB (low) (sf)
-- Class X-D at BBB (low) (sf)
-- Class F at BB (high) (sf)
-- Class G at BB (low) (sf)
-- Class X-E at B (sf)
-- Class H at B (low) (sf)

All trends are Stable. DBRS does not rate the first loss piece, Class J.

The rating confirmations reflect the overall stable performance of the transaction. At issuance, the collateral consisted of 49 fixed-rate loans secured by 119 commercial properties. As of the December 2017 remittance, all loans remained in the pool with an aggregate principal balance of $1.02 billion, representing a collateral reduction of approximately 0.6% since issuance as a result of scheduled loan amortization. There are currently 15 loans (29.7% of the pool) with remaining interest-only (IO) periods, ranging from eight to 36 months, while 11 loans (40.8% of the pool) are structured with full IO terms. To date, 40 loans (84.4% of the pool) reported partial-year 2017 financials, while 46 loans (96.9% of the pool) reported YE2016 financials. Based on the most recent year-end financial reporting, the transaction had a weighted-average (WA) debt service coverage ratio (DSCR) and WA Debt Yield of 1.62 times (x) and 9.1%, respectively, compared with the DBRS WA Term DSCR and WA Debt Yield of 1.51x and 8.5%, respectively.

The pool is concentrated by property type, as 17 loans, representing 28.9% of the pool, are secured by retail properties, while ten loans (28.5% of the pool) are secured by office properties and eight loans (16.4% of the pool) are secured by hotel properties. Additionally, thirteen loans (32.2% of the pool) are secured by properties that are either fully or primarily leased to single tenants. However, four of the six loans (14.2% of the pool) secured by single-tenant properties in the Top 15 are leased to investment-grade tenants. By loan size, the pool is concentrated, as the top 15 loans represent 66.7% of the pool. Based on the most recent cash flows available, the top 15 loans reported a WA DSCR of 1.75x, compared with the WA DBRS Term DSCR of 1.55x, which is reflective of the 12.9% net cash flow growth over the DBRS issuance figures.

As of the December 2017 remittance, there are five loans (6.1% of the pool) on the servicer watchlist. The two largest loans on the watchlist, Place Apartments (Prospectus ID#16, 2.4% of the pool) and Emerald Beach Resort (Prospectus ID#21, 0.7% of the pool), were flagged because of hail and hurricane damage, respectively. Both borrowers have opened insurance claims and the servicer is monitoring the loans. Of the remaining loans on the watchlist, one loan (1.2% of the pool) was flagged because of deferred maintenance, while two loans (1.1% of the pool) were flagged due to tenant rollover.

Classes X-A, X-HR, XP-A, X-B, X-C, X-D, X-E and X-F are IO certificates that reference a single rated tranche or multiple rated tranches. The IO ratings mirror 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 where updated performance information from issuance was available, 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 initially 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.