DBRS Confirms All Classes of CD 2016-CD1 Mortgage Trust

DBRS Limited (DBRS) confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2016-CD1 issued by CD 2016-CD1 Mortgage Trust 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-SB at AAA (sf)
-- Class A-M at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (sf)
-- Class X-B at A (high) (sf)
-- Class C at A (sf)
-- Class X-C at BBB (sf)
-- Class D at BBB (low) (sf)
-- Class X-D at BB (sf)
-- Class E at BB (low) (sf)
-- Class X-E at B (high) (sf)
-- Class F at B (sf)

All trends are Stable.

The rating confirmations reflect the strong overall performance of the transaction since issuance. The collateral consists of 32 fixed-rate loans secured by 58 commercial properties. As of the August 2018 remittance report, the pool exhibited a collateral reduction of 1.1% since issuance as a result of scheduled loan amortization, with a current outstanding balance of $695.2 million. Five loans, representing 34.3% of the pool, are structured with full-term interest-only (IO) payments and seven loans, representing 25.7% of the pool, have partial IO periods with one to 22 months remaining. These loans exhibited a weighted-average (WA) YE2017 debt service coverage ratio (DSCR) of 2.08 times (x) and debt yield of 9.7%.

Per the most recent year-end financials, 28 loans (85.2% of the pool) reported a WA DSCR of 2.06x and a debt yield of 9.7%. As of the August 2018 remittance, the top 15 loans reported a WA DSCR and WA debt yield of 2.23x and 9.9%, respectively, compared with 2.03x and 8.9%, respectively, at issuance.

Two loans representing 2.9% of the pool balance are on the servicer’s watchlist: Prospectus ID#18 – Kahana Retail and Prospectus ID#23 – North Pacific Plaza. These loans are being monitored for tenancy issues. The WA YE2017 DSCR and WA debt yield for the two loans was 1.17x and 9.6%, respectively. Further details are available on the DBRS Viewpoint platform.

At issuance, DBRS shadow rated the following loans as investment grade: 10 Hudson Yards (Prospectus ID#1 – 9.4% of the pool balance), Westfield San Francisco Centre (Prospectus ID#3 – 8.6% of the pool balance), Gas Company Tower & World Trade Center Parking Garage (Prospectus ID#8 – 5.8% of the pool balance) and Vertex Pharmaceuticals HQ (Prospectus ID#9 – 4.3% of the pool balance). DBRS confirmed that the performance of these loans remains consistent with investment-grade characteristics.

Classes X-A, X-B, X-C, X-D and X-E 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:

-- Prospectus ID#1 - 10 Hudson Yards (9.4% of the pool balance)
-- Prospectus ID#3 - Westfield San Francisco Centre (8.6% of the pool balance)
-- Prospectus ID#8 - Gas Company Tower & World Trade Center Parking Garage (5.8% of the pool balance)
-- Prospectus ID#9 - Vertex Pharmaceuticals HQ (4.3% of the pool balance)
-- Prospectus ID#18 - Kahana Retail (1.7% of the pool balance)
-- Prospectus ID#23 - North Pacific Plaza (1.2% of the pool balance)

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.

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.