DBRS Confirms All Classes of Real Estate Asset Liquidity Trust, Series 2016-1

DBRS Limited (DBRS) confirmed the ratings for all classes of the Commercial Mortgage Pass-Through Certificates, Series 2016-1 (the Certificates), issued by Real Estate Asset Liquidity Trust, Series 2016-1 (the Trust) as follows:

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

All trends are Stable.

The rating confirmations reflects the overall stable performance of the transaction since issuance. At issuance, the collateral consisted of 55 fixed-rate loans secured by 91 commercial properties. As at the April 2018 remittance, all loans remain in the pool with an aggregate principal balance of $382.8 million, representing a collateral reduction of 4.5% as a result of scheduled loan amortization. To date, loans representing 60.4% of the pool have reported YE2016 financials and, based on those figures, those loans reported a weighted-average (WA) debt service coverage ratio (DSCR) of 1.68 times (x), representing a WA net cash flow growth of 17.5% over the DBRS issuance figures.

The pool is fairly concentrated by property type, as 26 loans, representing 39.9% of the pool, are secured by retail properties, 11 loans (23.1% of the pool) are secured by multifamily properties, nine loans (15.2% of the pool) are secured by industrial properties and five loans (14.7% of the pool) are secured by office properties, representing 92.9% of the pool. By geographical location, the pool is most concentrated in central Canada, as the largest concentration by province is Ontario with 34 loans (55.9% of the pool), followed by Québec with eight loans (17.6% of the pool) and British Columbia with nine loans (10.0% of the pool). The pool is rather diverse in concentration by loan size, as the top ten and top 15 loans only represent 42.7% and 54.6% of the pool, respectively. The transaction benefits from 27 loans (50.6% of the pool) having some degree of recourse to their respective sponsors.

As at the April 2018 remittance, there are no loans on the servicer’s watchlist or in special servicing.

At issuance, DBRS shadow-rated the Toronto Congress Centre (Prospectus ID#2, 5.4% of the pool) as investment grade. DBRS confirms that the performance of this loan remains consistent with investment-grade loan characteristics.

Class X is an interest-only (IO) certificate that references 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:

-- Tamarack Centre Retail (Prospectus ID #1, 7.6% of the pool)
-- Toronto Congress Centre (Prospectus ID #2, 5.4% of the pool)
-- Hespeler Road Retail Cambridge (Prospectus ID #9, 2.8% of the pool)
-- The Opus Hotel (Prospectus ID #11, 2.4% of the pool)

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 Canadian 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.