DBRS Confirms Ratings on Morgan Stanley Bank of America Merrill Lynch Trust 2016-C28

DBRS Limited (DBRS) confirmed the ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2016-C28 issued by Morgan Stanley Bank of America Merrill Lynch Trust 2016-C28:

-- 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 X-A at AAA (sf)
-- Class X-B at AA (high) (sf)
-- Class B at AA (sf)
-- Class C at A (sf)
-- Class X-D at BBB (high) (sf)
-- Class D at BBB (sf)
-- Class E-1 at BBB (sf)
-- Class E at BBB (low) (sf)
-- Class E-2 at BBB (low) (sf)
-- Class EF at BB (sf)
-- Class F at BB (sf)
-- Class F-1 at BB (sf)
-- Class F-2 at BB (sf)
-- Class G-1 at B (high) (sf)
-- Class EFG at B (low) (sf)
-- Class G at B (low) (sf)
-- Class G-2 at B (low) (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. As of the February 2018 remittance, all 42 loans remain in the pool with an aggregate outstanding principal balance of approximately $948.9 million, which represents a collateral reduction of 0.7% since issuance as a result of scheduled loan amortization. Pool-wide, six loans (27.3% of the pool) are structured with full interest-only (IO) terms, while an additional 14 loans (39.2% of the pool) have partial IO periods remaining, ranging from eight months to 34 months. The DBRS Term debt-service coverage ratio (DSCR) and DBRS Debt Yield are 1.57 times (x) and 8.6%, respectively, or 1.41x and 8.4%, respectively, when excluding shadow-rated loans. All loans in the pool are reporting YE2016 figures with a weighted-average (WA) DSCR and WA debt yield of 1.77x and 9.7%, respectively. The 15 largest loans in the pool collectively represent 72.4% of the transaction balance, and based on the YE2016 financials, these loans are reporting a WA net cash flow (NCF) growth of 10.7% over the DBRS NCF figures, with a WA DSCR and debt yield of 1.82x and 9.5%, respectively.

As of the February 2018 remittance, there were five loans on the servicer’s watchlist, representing 15.6% of the pool, including two loans in the top 15. The loans on the watchlist are being monitored for either a low DSCR, casualty event or servicing trigger event. The largest loan in the pool, Prospectus ID#1 – Penn Square Mall, was added to the servicer’s watchlist in September 2017 due to a flooding incident that occurred in July 2017. The property sustained water damage as a result of flooding throughout the first floor, stemming from a broken water main valve. As of February 2018, the servicer received confirmation from the borrower that all tenants have re-opened, with the exception of The Gap (1.2% of the NRA), which is still closed with ongoing repairs. For additional information on this loan, please see the loan commentary on the DBRS Viewpoint platform, for which information is provided below.

At issuance, DBRS assigned an investment-grade shadow rating to two loans, Penn Square Mall (Prospectus ID#1, 9.5% of the pool) and GLP Industrial Portfolio A (Prospectus ID#3, 7.4% of the pool). DBRS confirmed that the performances of these loans remain consistent with the investment-grade loan characteristics.

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 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.

As part of this review, DBRS has provided updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

Prospectus ID#1 – Penn Square Mall
Prospectus ID#3 – GLP Industrial Portfolio
Prospectus ID#7 – Greenville Mall
Prospectus ID#13 – DoubleTree by Hilton
Prospectus ID#17 – H-Mart Town Center
Prospectus ID#32 – Holiday Inn Express & Suites
Prospectus ID#38 – La Quinta

For complimentary access to this content, please register for the DBRS Viewpoint platform at viewpoint.dbrs.com. The platform includes issuer and servicer data for the entire commercial mortgage-backed securities universe, as well as deal and loan-level commentary for all DBRS-rated transactions.

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.