DBRS Confirms All Classes of MSC Mortgage Securities Trust, 2012-C4

DBRS Limited (DBRS) confirmed all classes of MSC Mortgage Securities Trust, 2012-C4, as follows:

-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (high) (sf)
-- Class C at A (high) (sf)
-- Class D at A (low) (sf)
-- Class E at BBB (low) (sf)
-- Class F at BB (sf)
-- Class X-B at B (high) (sf)
-- Class G at B (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction, which has performed as expected since issuance, when the pool consisted of 38 fixed-rate loans secured by 77 commercial properties. As of the January 2018 remittance, there has been a collateral reduction of 30.9% because of scheduled loan amortization and the successful repayment of eight loans since issuance. There are no loans with partial-term interest-only payments remaining, and all loans are now amortizing. There are 29 loans, representing 98.9% of the pool balance, reporting year-end (YE) 2016 net cash flow figures; these loans reported a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 1.72 times (x) and 12.9%, respectively compared with 1.67x and 12.5%, respectively, at YE2015. The top 15 loans are performing similarly and reported a WA YE2016 DSCR and WA debt yield of 1.69x and 12.6%, respectively. This represents a WA improvement over the DBRS cash flow figures of 16.2% for the loans in the top 15.

The pool is concentrated with retail properties, which represent approximately 50% of the pool balance and include the two largest loans in the pool that are secured by regional malls. These two loans are sponsored by reputable regional mall operators, General Growth Partners (GGP) and Pennsylvania Real Estate Investment Trust (PREIT), and continue to report stable in-line occupancy rates of approximately 90.0%, with limited scheduled lease expirations in the upcoming 12 months. For additional information on DBRS’s perspective on these loans, please see the loan commentary on the DBRS Viewpoint platform, for which information is listed below.

As of the January 2018 remittance, there are four loans, representing 11.3% of the pool, on the servicer’s watchlist. The Independence Place – Fort Campbell loan (Prospectus ID#18; 1.9% of the issuance pool balance), which was previously with the special servicer, left the pool in February 2017. The resolution resulted in a ~$8.5 million loss; however, this was contained in the unrated Class H certificate.

At issuance, DBRS shadow-rated the ELS Portfolio loan (Prospectus ID#5; 7.8% of the current pool balance) investment grade. With this review, DBRS confirms that the performance of that loan remains consistent with investment-grade loan characteristics.

Classes X-A and X-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, 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 www.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.