DBRS Confirms Ratings of Citigroup Commercial Mortgage Trust 2017-B1

DBRS Limited (DBRS) confirmed the ratings for the following classes of the Commercial Mortgage Pass-Through Certificates, Series 2017-B1 issued by Citigroup Commercial Mortgage Trust 2017-B1 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-AB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class B at AA (high) (sf)
-- Class C at A (high) (sf)
-- Class X-D at BBB (high) (sf)
-- Class D at BBB (sf)
-- Class X-E at BB (high) (sf)
-- Class E at BB (sf)
-- Class F at B (high) (sf)
-- Class X-F 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 generally in line with DBRS’s expectations since issuance. The collateral consists of 48 fixed-rate loans secured by 69 commercial and multifamily properties. As of the July 2018 remittance, all loans remain in the pool with a trust balance of $938.6 million and collateral reduction of 0.3% since closing due to scheduled amortization. Given the pool’s recent vintage, just five loans, representing 18.7% of the pool, provided year-end (YE) 2017 financials as of the July 2018 remittance. At issuance, the transaction had a weighted-average (WA) DBRS Term Debt-Service Coverage Ratio (DSCR) and DBRS Debt Yield of 1.95x and 9.8%, respectively, reflective of a generally strong credit profile for the underlying loans.

The pool has a relatively high concentration of loans secured by non-traditional property types, such as self-storage, hospitality and manufactured housing community assets which, on a combined basis, represent 30.0% of the pool across 17 loans. Such loans exhibit a WA DBRS Debt Yield and DBRS Exit Debt Yield of 10.0% and 11.4%, respectively, which compare favorably with the overall deal. Additionally, 78.8% of such loans (by loan balance) are located in established suburban, urban or super-dense urban markets that benefit from increased liquidity and more stable performance. There are 20 loans, representing 59.0% of the pool, including ten of the largest 15 loans, structured with interest-only (IO) payments for the full term. An additional 15 loans, representing 16.0% of the pool, have partial IO periods ranging from ten months to 48 months remaining. The percentage of loans structured with full-term and partial IO payments relative to the total pool is elevated at 75.0%. Ten of the full- or partial-term IO loans, representing 52.2% of the IO concentration in the transaction, have excellent locations in super-dense urban or urban markets that benefit from steep investor demand.

Four loans, representing 23.9% of the pool, were shadow-rated investment grade by DBRS at issuance. These loans include General Motors Building (Prospectus ID#1, 9.9% of the pool), Lakeside Shopping Center (Prospectus ID#2, 6.3% of the pool), Two Fordham Square (Prospectus ID#5, 5.6% of the pool) and Del Amo Fashion Center (Prospectus ID #18, 2.2% of the pool). With this review, DBRS has confirmed that the performance of all four loans remains consistent with investment-grade 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:

-- Lakeside Shopping Center (Prospectus ID#2)
-- Two Fordham Square (Prospectus ID#5)

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.

The rating assigned to Class F materially deviates from the higher ratings implied by the quantitative results. DBRS considers a material deviation to be a rating differential of three or more notches between the assigned rating and the rating implied by the quantitative results that is a substantial component of a rating methodology. The deviations are warranted given that the sustainability of loan trends has not been demonstrated.

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.

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.