DBRS Confirms All Classes of Bank of America Merrill Lynch Commercial Mortgage Trust 2016-UBS10

DBRS Limited (DBRS) confirmed all classes of Commercial Mortgage Pass-Through Certificates, Series 2016-UBS10 issued by Bank of America Merrill Lynch Commercial Mortgage Trust 2016-UBS10 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-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 X-E at BBB (low) (sf)
-- Class E at BB (high) (sf)
-- Class X-F at BB (sf)
-- Class F at BB (low) (sf)
-- Class X-G 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. The transaction consists of 52 loans secured by 84 commercial properties. As of the May 2018 remittance report, the trust balance was $866.2 million, representing collateral reduction of 1.2% from issuance as a result of scheduled amortization, with all original loans remaining in the pool. Loans representing 71.1% of the pool reported YE2017 financials, with a weighted-average (WA) debt service coverage ratio (DSCR) and debt yield of 1.68 times (x) and 10.3%, respectively. The largest 15 loans reported either partial-year or YE2017 financials, with a WA DSCR and WA debt yield of 1.64x and 9.9%, respectively, representing a WA cash flow improvement of 13.0% over the DBRS net cash flow figures derived at issuance.

As of the May 2018 remittance, there was one loan on the servicer’s watchlist, representing 0.6% of the pool, and one loan, representing 0.8% of the pool, in special servicing. The loan on the watchlist is being monitored for deferred maintenance. The specially serviced loan, Prospectus ID#34 – Comfort Inn – Cross Lanes, WV, was transferred to special servicing in October 2017 for imminent default, stemming from the low DSCR. The collateral property is a limited-service hotel located in Cross Lanes, West Virginia, and is currently operating as a Wyndham Garden Inn. As of YE2017 financials, the loan is reporting a DSCR of 0.06x, compared with the YE2016 DSCR of 1.48x. The performance decline in 2017 is primarily due to a 33.5% decline in room revenue, driven by lower occupancy at the property in 2017. The loan remains current, with shortfalls funded from both a seasonality reserve and out of pocket by the borrower. The borrower has engaged a hospitality consultant in order to further improve performance. For additional information on this loan, please see the Loan Commentary on the DBRS Viewpoint platform, for which information is provided below.

Classes X-A, X-B, X-D, X-E, X-F and X-G are interest-only (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#2 – In-Rel 8
-- Prospectus ID#6 – Burleson Crossing
-- Prospectus ID#13 – Le Meridien Cambridge MIT
-- Prospectus ID#14 – AvidXchange
-- Prospectus ID#34 – Comfort Inn – Cross Lanes, WV

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-back security 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.