DBRS Confirms Ratings of ACRE Commercial Mortgage 2017-FL3 Ltd.

DBRS, Inc. (DBRS) confirmed the ratings on the following classes of secured Floating Rate Notes issued by ACRE Commercial Mortgage 2017-FL3 Ltd. (the Issuer):

-- 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 (low) (sf)
-- Class E at BB (low) (sf)
-- Class F at B (low) (sf)

All trends are Stable.

Classes E and F are non-offered classes.

The transaction is a managed collateralized loan obligation pool that includes 17 loans and totals $557.0 million. This represents an upsize from the initial transaction that was rated by DBRS in February 2017. The original 2017 transaction consisted of 12 loans secured by 16 commercial real estate properties, with a total trust balance of $341.2 million. Since then, 11 loans have been paid off, comprising $307.2 million of the original pool balance, and 16 new loans have been added to the trust. Only one loan of the original 2017 securitization remains in the current pool. While the entire pool can change as loans pay off and funds are redeployed, the Issuer is required to meet Reinvestment Criteria, which, among other things, includes a Rating Agency Confirmation (RAC) for each additional loan obligation prior to reinvestment, to mitigate volatility. Nine of the current loans, or 52.8% of the total trust balance, have a pari passu companion participation held by a subsidiary of the trust asset seller and sponsor, ACRC Lender LLC. As of December 14, 2018, the total amount of future commitments is $47.7 million. The current collateral consists of 48 multifamily, office, hotel and industrial assets that generally have some level of transition or stabilization, which is the premise for seeking floating-rate short-term debt. The transaction has a Reinvestment Period that is expected to expire in March 31, 2021, and DBRS will have the ability to provide an RAC on loans that are added to the pool during the Reinvestment Period in order to evaluate any credit drift caused by potential loan concentrations.

All ratings will be subject to ongoing surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed or discontinued by DBRS.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is the North American CMBS Surveillance Methodology, 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 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.

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