DBRS Confirms All Classes of JPMBB Commercial Mortgage Securities Trust 2015-C30

DBRS Limited (DBRS) confirmed the ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2015-C30 issued by JPMBB Commercial Mortgage Securities Trust 2015-C30:

-- 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-5 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 (sf)
-- Class B at AA (low) (sf)
-- Class X-C at A (sf)
-- Class C at A (low) (sf)
-- Class EC at A (low) (sf)
-- Class X-D at BBB (sf)
-- Class D at BBB (low) (sf)
-- Class X-E at BB (sf)
-- Class E at BB (low) (sf)
-- Class X-F at B (high) (sf)
-- Class F at B (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance in July 2015 when the deal closed with an original trust balance of $1.3 billion. The transaction consisted of 70 fixed-rate loans secured by 114 commercial properties at issuance, and as of the June 2018 remittance, there has been a collateral reduction of 3.7% since issuance due to the repayment of three loans and scheduled amortization. Sixty-two loans in the pool reported YE2017 financials, reporting a weighted average (WA) debt service coverage ratio (DSCR) and debt yield of 1.58 times (x) and 9.0%, respectively; both figures are generally flat from the YE2016 figures. In addition to benefitting from stable cash flow performance since issuance, the largest loans in the pool have performed particularly well in general. Based on the YE2017 financials, the top 15 loans (57.7% of the pool) reported a WA DSCR of 1.74x compared with the WA DBRS Term DSCR at issuance of 1.45x, representing a WA net cash flow growth (NCF) of 20.3% from DBRS NCF figures for those loans. There is one top 15 loan being monitored closely by DBRS in the One City Centre loan (Prospectus ID #12), which is secured by an office tower in downtown Houston, Texas. The property has seen precipitous occupancy declines since issuance, when the property was 83.0% occupied, to the leased rate of approximately 74.2% as of July 2018. There is potential for additional occupancy declines in the near term as well, as the second-largest tenant, Energy XXI (21.1% of the net rentable area (NRA)), which previously filed for bankruptcy and restructured its lease from the original lease expiry in 2022, will now roll at the end of 2018. The loan was analyzed with a stressed cash flow to reflect these increased risks for this review. For additional information on this loan, please see the DBRS Viewpoint platform for which information is provided below.

As of the June 2018 remittance, there are four loans, representing 8.8% of the current pool balance, on the servicer’s watchlist and no loans in special servicing. The largest loan on the watchlist, Pealridge Center (Prospectus ID#2, 5.4% of the current pool balance), is secured by a mixed-use regional shopping center in Aiea, Hawaii. The loan was placed on the servicer’s watchlist in April 2018 because small tenant Toys “R” Us (in place on a ground lease representing approximately 5.0% of the NRA) filed for bankruptcy and closed the location at the subject as part of the company’s liquidation of stores nationwide. Given the small footprint for the tenant, as well as the strong overall performance of the loan, which reported a YE2017 DSCR of 3.04x and an in-place debt yield of 10.9%, DBRS does not expect the Toys “R” Us closure to have significant impact on the overall performance of the property. The loan is one of two loans shadow-rated investment grade by DBRS in the pool, and with this review, DBRS confirmed that the performances of this and the other loan, Scottsdale Quarter (Prospectus ID #11, 3.2% of the current pool balance), remain consistent with investment-grade loan characteristics.

The second-largest loan on the watchlist, Woodlark Fund Portfolio (Prospectus ID #16, 2.4% of the pool), is secured by a portfolio of three multifamily properties and is being monitored for a low average occupancy for the portfolio at mid-year 2017 (driven by one property that had a low occupancy rate for the summer between semesters). The two smallest loans, both secured by limited-service hotels in tertiary markets, are being monitored for a low DSCR. Although the low occupancy rate for the Woodlark Fund Portfolio loan is somewhat concerning, the annualized cash flows as of the Q2 2017 reporting show a DSCR of 1.32x, a figure that is in line with the previous two year-end figures and above the DBRS Term DSCR at issuance of 1.22x. DBRS expects the occupancy decline is temporary and the full year-end 2017 reporting will show levels at or near historical figures. The smaller loans secured by hotels with declining cash flows were analyzed with a stressed cash flow scenario to increase the probability of default for the purposes of this review.

Classes X-A, X-B, X-C, X-D, X-E and X-F 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 – One Shell Square
-- Prospectus ID#2 – Pealridge Center
-- Prospectus ID#3 – Sunbelt Portfolio
-- Prospectus ID#4 – Brunswick Portfolio
-- Prospectus ID#5 – Parker Plaza
-- Prospectus ID#6 – Castleton Park
-- Prospectus ID#7 – Bethesda Office Center
-- Prospectus ID#10 – Boulevard Square
-- Prospectus ID#11 – Scottsdale Quarter
-- Prospectus ID#12 – One City Center
-- Prospectus ID#16 – Woodlark Fund Portfolio
-- Prospectus ID#46 – Hampton Inn Groton

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.