DBRS Confirms All Classes of CD 2017-CD6 Mortgage Trust

DBRS Limited (DBRS) confirmed all ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2017-CD6 issued by CD 2017-CD6 Mortgage Trust:

-- 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-M at AAA (sf)
-- Class A-SB 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 A (high) (sf)
-- Class D at A (sf)
-- Class E-RR at BBB (sf)
-- Class F-RR at BB (high) (sf)
-- Class G-RR at BB (low) (sf)

All trends remain Stable.

The rating confirmations reflect the overall stable performance of the transaction, which has remained in line with DBRS’s expectations since issuance. The subject transaction closed in November 2017 and originally consisted of 58 fixed-rate loans secured by 125 commercial and multifamily properties with an original trust balance of $1,061 million. As of the October 2018 remittance, there has been a collateral reduction of 0.6% since issuance because of scheduled loan amortization with all 58 loans remaining in the pool.

Three loans, representing 9.0% of the pool – Burbank Office Portfolio (Prospectus ID#3; 4.7% of the pool), Moffett Place Building 4 (Prospectus ID#15; 2.4% of the pool) and Colorado Center (Prospectus ID#23; 1.9% of the pool) – exhibit performance consistent with investment-grade loan characteristics. Furthermore, term default risk is moderate as indicated by the relatively strong weighted-average (WA) DBRS Term debt service coverage ratio (DSCR) of 1.76 times (x). The pool is highly concentrated by property type as the office concentration is 41.1% of the pool balance; however, approximately 21.9% of the office concentration is shadow-rated investment-grade. Fifteen loans, representing 34.4% of the pool, including six of the largest 15 loans, are structured with full-term interest-only (IO) payments. Five of these loans, representing 32.1% of the full-IO concentration, are located in urban markets.

As of the October 2018 remittance, there were two loans – Hampton Inn Majestic Chicago (Prospectus ID#20; 2.0% of the pool) and Sierra Center (Prospectus ID#24; 1.8% of the pool) – on the servicer’s watchlist. Both loans were placed on the servicer’s watchlist because of lower-than-projected DSCRs; however, both properties are currently stabilized and were placed on the servicer’s watchlist based on partial-year financial figures. Performance is expected to improve as the loans season.

As of the October 2018 remittance, there were five loans, representing 7.6% of the pool balance, reporting year-end (YE) 2017 financials with 54 loans, representing 93.7% of the pool, reporting partial-year 2018 figures. One loan in the top 15 reported YE2017 financials, representing 2.5% of the pool. The limited financial reporting for the deal is expected, given the recent vintage and fourth-quarter closing date. In general, the partial-year 2018 figures reported are in line with DBRS’s expectations at issuance.

Classes X-A, X-B and X-D 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#3 – Burbank Office Portfolio (4.7% of the pool)
-- Prospectus ID#11 – One Imeson (2.6% of the pool)
-- Prospectus ID#14 – Station Place III (2.5% of the pool)
-- Prospectus ID#20 – Hampton Inn Majestic Chicago (2.0% of the pool)
-- Prospectus ID#24 – Sierra Center (1.8% of the pool)

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.