DBRS Confirms All Classes of BANK 2018-BNK10

DBRS Limited (DBRS) confirmed the ratings on the following classes of Commercial Mortgage Pass-Through Certificates (the Certificates), Series 2018-BNK10 issued by BANK 2018-BNK10:

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

All trends are 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 February 2018, and the collateral consists of 68 loans secured by 181 commercial properties. As of the December 2018 remittance, all loans remained in the pool, and the aggregate principal balance was $1,282.7 million, representing a collational reduction of 0.4% since issuance. Approximately 91.7% of loan the loan balance reported 2018 partial-year financials, which is expected due to the recent vintage and first-quarter closing date. At issuance, the loans reported a weighted-average (WA) DBRS Term debt service coverage ratio (DSCR) and WA DBRS Debt Yield of 1.90 times (x) and 9.4%, respectively.

As of the December 2018 remittance, there were four loans on the servicer’s watchlist, representing 1.6% of the current pool balance. Three of these loans were flagged for low DSCRs and were based on partial-year financials. Cash flow variances are rather common as the loans continue to season and stabilize. The remaining watchlisted loan (Worthington Industrial Park – Prospectus ID#58; 0.2% of the pool balance) was flagged for upcoming tenant rollover, as over 70.0% of its net rentable area has lease expirations prior to year-end 2019.

At issuance, two loans (Apple Campus 3 – Prospectus ID#1 and Moffett Towers II – Building 2 – Prospectus ID#10), representing 10.6% of the current pool balance, were shadow-rated investment grade. With this review, DBRS confirms that the performance of these loans remains consistent with investment-grade loan characteristics. For additional information on these loans, please see the loan commentary in the DBRS Viewpoint platform, for which information is provided below.

Classes X-A, X-B, X-D, X-E, 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 are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed or discontinued by DBRS.

DBRS provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Prospectus ID#1 – Apple Campus 3 (7.3% of the pool)
-- Prospectus ID#4 – Wisconsin Hotel Portfolio (5.7% of the pool)
-- Prospectus ID#10 – Moffett Towers II – Building 2 (3.2% 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 most outstanding CMBS transactions (including non-DBRS rated), as well as loan-level and transaction-level commentary for most DBRS-rated and -monitored 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 www.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, which can be found on www.dbrs.com in the Commentary tab under Regulatory Affairs. 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.

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