DBRS Confirms Ratings of PFP 2017-4, Ltd.

DBRS Limited (DBRS) confirmed the ratings on the following classes of secured floating-rate notes issued by PFP 2017-4, Ltd.:

-- Class A at AAA (sf)
-- Class A-S at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class D at BBB (sf)
-- Class E at BBB (low) (sf)
-- Class F at BB (sf)
-- Class G at B (sf)

All trends are Stable.

All classes are privately placed.

The rating confirmations reflect the overall stable performance of the transaction, which remains in line with DBRS’s expectations at issuance. At issuance, the collateral consisted of 31 floating-rate mortgage loans secured by 35 transitional commercial, multifamily and hospitality properties with a trust balance of $652.2 million. According to the September 2018 remittance, there has been collateral reduction of 6.7% since issuance, as four loans have repaid from the trust, contributing to a principal paydown of $43.4 million. All the remaining properties are currently cash-flowing assets in a period of transition with viable plans and loan structures in place to facilitate stabilization and value growth. Seventeen of the remaining loans in the pool have future funding components that are to be used for property renovations and future leasing costs to aid in property stabilization.

According to the most recent reporting, a portion of the collateral assets in the subject pool has reached stabilization; however, others continue to perform below their respective stabilization plans. All loans have an initial term of two or three years, with one to four 12-month extension options available. As of the September 2018 remittance, there are no loans in special servicing and one loan on the servicer’s watchlist (River Park Business Center), representing 2.2% of the fully funded pool balance. The loan has been flagged for upcoming tenant rollover, as the second-largest tenant, representing 31.6% of the net rentable area, has a scheduled lease expiration in December 2018. The servicer has contacted the borrower for a leasing update. The loan benefits from $1.4 million in remaining future funding commitments to fund lender-approved future leasing costs at the property. For additional information on this loan, please see the loan commentary on the DBRS Viewpoint platform, for which information is provided below.

The loans were all sourced by Prime Finance, an affiliate of PFP Inc., which has strong origination practices. Since inception, Prime Finance has originated or acquired approximately 316 commercial and multifamily mortgage loans, representing total capital commitments of approximately $9.2 billion. PFP Inc. retains 16.5% of the current pool balance, which includes Class E, Class F, Class G and the Preferred Shares.

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:

-- One Kansas City Place
-- The Elements at Wateridge
-- River Park Business Center

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 commercial mortgage-backed securities 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 North American CMBS Surveillance Methodology, 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.