DBRS Confirms All Classes of Citigroup Commercial Mortgage Trust 2015-GC27

DBRS Limited (DBRS) confirmed all classes of Commercial Mortgage Pass-Through Certificates, Series 2015-GC27 issued by Citigroup Commercial Mortgage Trust 2015-GC27 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-5 at AAA (sf)
-- Class A-AB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (sf)
-- Class X-B at A (sf)
-- Class C at A (low) (sf)
-- Class PEZ at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class X-E at BB (sf)
-- Class E at BB (low) (sf)
-- Class F at B (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 for the pool since issuance when the collateral consisted of 100 fixed-rate loans secured by 116 commercial properties. As of the November 2018 remittance, there has been a collateral reduction of 3.2% as a result of scheduled loan amortization and the repayment of one small loan. In addition, three loans, representing 2.6% of the current pool balance, are fully defeased. Loans representing 96.7% of the current pool balance are reporting YE2017 figures with a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 1.74 times (x) and 9.9%, respectively. The DBRS WA Term DSCR and WA debt yield at issuance for the pool overall were 1.45x and 8.1%, respectively. The largest 15 loans in the pool collectively represent 50.9% of the transaction balance and reported YE2017 financials showing a WA net cash flow (NCF) growth of 20.4% over the DBRS Term NCF figures derived at issuance with a WA in-place DSCR and debt yield of 1.74x and 9.5%, respectively.
There are eight loans, representing 8.4% of the pool balance, on the servicer’s watchlist for performance-related issues. Two of the watchlisted loans are in the top 15, including Highland Square (Prospectus ID#5; 3.3% of the pool balance) and Whitman Square (Prospectus ID#6; 2.6% of the pool balance). DBRS is most concerned with the Highland Square loan, which has reported a DSCR hovering near 0.90x since YE2017 and is secured by a multifamily property located in Oxford, Mississippi. The property caters to students at the University of Mississippi (Ole Miss) and has seen significant declines in average rental rates and overall occupancy figures in the last few years. The property is located approximately two miles from the Ole Miss campus, which may have contributed to declines in its competitive stance as newer properties have been delivered closer to campus in recent years. For the purposes of this review, a stressed cash flow scenario was applied to significantly increase the probability of default (POD) and loss given default (LGD) and the loan will be monitored closely for developments. For additional information on this loan, please see the DBRS Viewpoint platform, for which information has been provided below.

There is also one loan in special servicing, Zane Plaza Shopping Center (Prospectus ID#45; 0.7% of the current pool balance), which transferred to special servicing for imminent monetary default after the collateral property’s largest tenant, the Elder-Beerman Stores Corp. (Elder-Beerman), vacated the property following its parent company’s bankruptcy and ultimate liquidation. Elder-Beerman formerly represented 48.1% of the net rentable area (NRA) and remaining tenants include Planet Fitness (PFIP, LLC; 11.5% of the NRA through April 2026) and Jo-Ann Stores, Inc. (6.6% of the NRA through January 2019). Given the property’s sharp occupancy decline and its location in rural Chillicothe, Ohio, approximately 100 miles from Cincinnati, DBRS assumed a highly stressed scenario for this loan to increase the POD and LGD in the analysis for this review.

Classes X-A and X-B 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:

-- Prospectus ID#4 – Twin Cities Premium Outlets (4.3% of pool)
-- Prospectus ID#5 – Highland Square (3.3% of pool)
-- Prospectus ID#6 – Whitman Square (2.6% of pool)
-- Prospectus ID#13 – DoubleTree Little Rock (1.8% of pool)
-- Prospectus ID#40 – Midtown Center (0.8% of pool)
-- Prospectus ID#45 – Zane Plaza Shopping Center (0.7% of pool)
-- Prospectus ID#82 – Value Place – Sacramento (0.3% of 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 & Criteria. 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.