DBRS Confirms All Classes of Citigroup Commercial Mortgage Trust 2016-C3

DBRS Limited (DBRS) confirmed the ratings on the following classes of Citigroup Commercial Mortgage Trust 2016-C3 issued by Citigroup Commercial Mortgage Securities Inc.:

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

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance. The collateral consists of 44 loans secured by 72 commercial and multifamily properties. As of the September 2018 remittance, the pool had an aggregate trust balance of approximately $746.8 million, representing a collateral reduction of 1.3% since issuance due to scheduled loan amortization. To date, 94.6% of the pool is reporting year-end 2017 financials. Based on the most recent year-end financials, the pool reported a weighted-average (WA) debt service coverage ratio (DSCR) and debt yield of 2.06 times (x) and 9.8%, respectively, compared with the WA DBRS Term DSCR and WA DBRS Debt Yield figures of 1.89x and 8.9% at issuance, respectively.

The transaction is concentrated by loan size, as the largest 15 loans represent 71.5% of the current pool balance. Additionally, nine of these loans, representing 46.8% of the current pool balance, are encumbered with pari passu debt. However, the pool has benefited from stable cash flow performance, as the top 15 loans reported a WA DSCR of 2.11x (based on the most recent year-end financials), compared with the WA DBRS Term DSCR of 2.02x at issuance, representing a WA net cash flow (NCF) growth of 6.3%.

As of the September 2018 remittance, there are two loans, representing 1.8% of the current pool balance, on the servicer’s watchlist. The larger of the two loans, The Bristol Hotel (Prospectus ID#20, representing 1.6% of the current pool balance), was flagged for a low year-end 2017 DSCR. However, the collateral hotel recently underwent a $5.5 million renovation between January 2017 and July 2017, with blocks of rooms offline during that period. Now that all rooms are available for booking and the hotel has been improved significantly, the sponsor expects cash flows to stabilize through the near to medium term.

At issuance, DBRS shadow-rated two loans, Potomac Mills (Prospectus ID#6, representing 4.6% of the current pool balance) and Quantum Park (Prospectus ID#8, representing 4.0% of the current pool balance), investment grade. With this review, DBRS confirms that the performance of both loans remains consistent with the investment-grade shadow rating.

Classes X-A, X-B, 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:

-- Briarwood Mall (Prospectus ID#1, 8.6% of the current pool balance)
-- 101 Hudson (Prospectus ID#3, 7.7% of the current pool balance)
-- Potomac Mills (Prospectus ID#6, 4.6% of the current pool balance)
-- Quantum Park (Prospectus ID#8, 4.0% of the current 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 North American CMBS 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.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.