DBRS Confirms All Classes of CD 2017-CD4 Mortgage Trust

DBRS Limited (DBRS) confirmed all classes of the Commercial Mortgage Pass-Through Certificates, Series 2017-CD4 issued by CD 2017-CD4 Mortgage 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-SB at AAA (sf)
-- Class A-M at AAA (sf)
-- Class X-A at AAA (sf)
-- Class V-A at AAA (sf)
-- Class B at AA (high) (sf)
-- Class X-B at AA (low) (sf)
-- Class C at A (high) (sf)
-- Class V-BC at A (high) (sf)
-- Class X-D at BBB (high) (sf)
-- Class D at BBB (sf)
-- Class V-D at BBB (sf)
-- Class X-E at BBB (low) (sf)
-- Class E at BB (high) (sf)
-- Class X-F at BB (sf)
-- Class F at BB (low) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction, which has generally remained in line with DBRS’s expectations since issuance. This transaction closed in May 2017, with a trust balance of $900.5 million, composed of 47 fixed-rate loans secured by 53 commercial properties. As of the April 2018 remittance, the pool has experienced a collateral reduction of 0.4% since issuance due to scheduled loan amortization, with all loans remaining in the pool. There are ten loans (28.5% of the pool balance), including four of the top 15 loans (22.2% of the pool), that were structured with full interest-only (IO) payment terms at issuance. In addition, 18 loans (44.6% of the pool) were structured with partial IO periods at issuance, all of which are still in a partial IO period as of April 2018. Twenty-six loans (49.3% of the pool) reported partial 2017 or YE2017 financials and based on those figures, the weighted-average (WA) debt service coverage ratio (DSCR) and debt yield was 1.57 times (x) and 8.7%, respectively. At issuance, the WA DBRS Term DSCR and WA DBRS Debt Yield for the pool was 1.58x and 9.1%, respectively.

As of the April 2018 remittance, there was one loan on the servicer’s watchlist and no loans in special servicing. The loan on the watchlist, Los Angeles Corporate Center (Prospectus ID#4; 6.6% of the pool balance), is being monitored for covenant compliance as the third largest tenant, SynerMed (representing 12.5% of net rentable area), failed to submit its February 2018 rental payment. As of November 2017, SynerMed announced that the company will be discontinuing all operations in the near term and according to the documents received at issuance, the tenant’s vacancy should have triggered a cash flow sweep for the loan. The servicer has noted that a lockbox has been activated and DBRS has requested a leasing update regarding SynerMed’s space at the subject.

At issuance, DBRS assigned an investment-grade shadow rating on two loans, 95 Morton Street (Prospectus ID#1; 10.6% of the pool balance) and Hilton Hawaiian Village Waikiki Beach Resort (Prospectus ID#5; 6.3% of the pool balance). With this review, DBRS confirmed that the performance of these loans remains consistent with investment-grade loan characteristics.

Classes X-A, X-B, X-D, X-E and X-F are IO certificates that reference a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated applicable reference obligation 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 – 95 Morton Street
-- Prospectus ID#4 – Los Angeles Corporate Center
-- Prospectus ID#5 – Hilton Hawaiian Village Waikiki Beach Resort
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.