DBRS Confirms All Classes of LSTAR Commercial Mortgage Trust 2015-3

DBRS Limited (DBRS) confirmed the ratings of Commercial Mortgage Pass-Through Certificates, Series 2015-3 issued by LSTAR Commercial Mortgage Trust 2015-3 (the Trust) as follows:

-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-S at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class X-C at BBB (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (sf)
-- Class X-A at B (high) (sf)
-- Class X-B at B (high) (sf)
-- Class F at B (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. As of the May 2018 remittance, there has been a collateral reduction of 15.6% since issuance as a result of loan prepayments and liquidations, as 33 of the original 62 loans have paid out or have been liquidated. As of the May 2018 remittance report, total losses of approximately $50,000 to the Trust have been contained to the unrated Class G certificates.

The 11 largest loans remaining in the pool were newly originated at issuance, while the other 18 loans are seasoned loans that were purchased by the loan seller from Fannie Mae or were originally part of the now retired LASL 2006-MF2 and LASL 2006-MF3 commercial mortgage-backed securities (CMBS) transactions. The newly originated loans are secured by hospitality, retail, office and multifamily properties, while the seasoned loans are secured by multifamily and manufactured housing community properties. The seasoned loans are of granular concentration as the largest seasoned loan represents 0.4% of the current pool balance. All of the remaining seasoned loans, representing 4.4% of the current pool balance, are fully amortizing.

Loans representing 93.8% of the current pool balance are reporting updated year-end figures. Based on these financials, those loans reported a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 1.67 times (x) and 8.7%, respectively. The DBRS WA DSCR and WA debt yield at issuance for those loans were 1.38x and 8.6%, respectively.

As of the May 2018 remittance, one loan is in special servicing and four loans are on the servicer’s watchlist, representing 0.4% and 1.1% of the pool, respectively. The loans on the servicer’s watchlist have been flagged because of items of deferred maintenance, lack of recent financials provided or a decrease in financial performance since issuance. The specially serviced loan was transferred due to imminent default.

Classes X-A, X-B and X-C 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#1 – Redwood Shores
-- Prospectus ID#2 – InterContinental Hotel Monterey
-- Prospectus ID#22 – 710 Loggins Drive

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.