DBRS Confirms All Classes of DBJPM 2016-C1 Mortgage Trust

DBRS Limited (DBRS) confirmed all classes of the Commercial Mortgage Pass-Through Certificates, Series 2016-R1 (the Certificates) issued by DBJPM 2016-C1 Mortgage Trust as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-3A at AAA (sf)
-- Class A-3B at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-M at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (low) (sf)
-- Class X-B at A (sf)
-- Class C at A (low) (sf)
-- Class X-C at BBB (sf)
-- Class D at BBB (low) (sf)
-- Class X-D at BB (sf)
-- Class E at BB (low) (sf)
-- Class F at B (sf)
-- Class X-E at B (sf)
-- Class G at B (low) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction, which has remained in line with DBRS’s expectations since issuance. At issuance, the transaction consisted of 33 fixed-rate loans secured by 45 commercial properties for a total trust balance of approximately $818.0 million. As of the April 2018 remittance report, the trust balance was $810.9 million, representing a collateral reduction of 0.9% since issuance as a result of scheduled amortization. All of the original loans remain in the pool. Seven loans, representing 39.0% of the pool, are structured with full-term interest-only (IO) payments. An additional 11 loans, representing 35.1% of the pool, have partial IO payments remaining, with four of those loans (6.0% of the pool), scheduled to begin amortizing in the next year. Loans representing 56.9% of the pool reported YE2017 financials, with a weighted-average (WA) debt service coverage ratio (DSCR) and debt yield of 1.55 times (x) and 9.3%, respectively. The largest 15 loans reported either partial-year or YE2017 financials, with a WA DSCR and WA debt yield of 1.73x and 9.4%, respectively, representing a WA cash flow improvement of 7.9% over the DBRS net cash flow figures derived at issuance.

As of the April 2018 remittance, there were five loans on the servicer’s watchlist, collectively representing 15.7% of the pool, and no loans in special servicing. Three of the loans on the watchlist are being monitored due to deferred maintenance, while the other two are being monitored for a low YE2017 or Q3 2017 net cash flow figure. The two loans being monitored for cash flow declines are hotel properties located in Miami and Houston. Performance declines for these properties were attributed to weakening corporate demand in Houston and increased competition in Miami within the hospitality sector. The hotel property located in Houston, Prospectus ID #4 – Sheraton North Houston (4.9% of the current pool balance), was also affected by the loss of a United Airlines corporate contract, which represented an average of 180 to 200 rooms per night, as the airline moved its pilot training to Denver in August 2017. According to the servicer, the borrower was able to secure a deal with a smaller airline for approximately 20 rooms per night, and is working to secure two additional corporate contracts at the subject. 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 on two loans, 787 Seventh Avenue (Prospectus ID #1), representing 9.9% of the pool balance and 225 Liberty Street (Prospectus ID #5), representing 5.0% of the pool. DBRS has confirmed that the performance of these loans remains consistent with investment-grade loan characteristics.

Classes X-A, X-B, X-C, X-D and X-E 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 will continue to monitor this transaction with periodic updates provided in the DBRS Viewpoint platform.

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 – 787 Seventh Avenue
-- Prospectus ID #2 – Williamsburg Premium Outlets
-- Prospectus ID #5 – 225 Liberty Street
-- Prospectus ID 6 – 600 Broadway
-- Prospectus ID #4 – Sheraton North Houston
-- Prospectus ID #7 – SLS South Beach
-- Prospectus ID #11 – Columbus Park Crossing
-- Prospectus ID #12 – Hagerstown Premium Outlets

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrs.com. The platform includes issuer and servicer data for the entire CMBS 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.