DBRS Confirms All Classes of Wells Fargo Commercial Mortgage Trust 2017-RC1

DBRS Limited (DBRS) confirmed all classes of the Commercial Mortgage Pass-Through Certificates, Series 2017-RC1 issued by Wells Fargo Commercial Mortgage Trust 2017-RC1 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-S at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (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 E at BB (low) (sf)
-- Class X-E at BB (low) (sf)
-- Class F at B (low) (sf)
-- Class X-F at B (low) (sf)

All trends are Stable.

The rating confirmations reflect the overall performance of the transaction, which has remained in line with DBRS expectations since issuance. The collateral consists of 61 fixed-rate loans secured by 78 commercial and multifamily properties. As at the January 2019 remittance, there has been a collateral reduction 1.1% as a result of scheduled loan amortization. Eleven loans, representing 34.0% of the pool balance, are structured with full-term interest-only (IO) payments. An additional nine loans, representing 19.6% of the pool, have partial IO payments remaining, with three of those loans (3.2% of the pool) scheduled to begin amortizing in the next year.

Loans representing 93.6% of the current pool balance reported Q3 2018 financials and reported a weighted-average (WA) debt service coverage ratio (DSCR) and debt yield of 1.88 times (x) and 11.0%, respectively. All but one of the largest 15 loans reported partial-year 2018 financials, with a WA DSCR and WA debt yield of 1.98x and 10.9%, respectively, representing a WA cash flow improvement of 7.8% over the preceding net cash flow figures.

As of the January 2019 remittance, there were five loans on the servicer’s watchlist, collectively representing 2.9% of the pool, and no loans in special servicing. One loan was flagged for minor deferred maintenance issues and another loan was flagged for a low DSCR; however, this loan is secured a co-operative property. Two of the loans on the watchlist are being monitored for occupancy related issues, a result of weakened market conditions. The last loan was flagged for an upcoming major tenant lease expiry; however, the tenant in question has since renewed its lease.

Classes X-A, X-B, X-D, X-E and X-F 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 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 – Hyatt Place Portfolio (8.9% of the pool)
-- Prospectus ID#34 – Little York Plaza Shopping Center (0.9% of the pool)
-- Prospectus ID#36 – 118 Flats Oval (0.9% of the pool)
-- Prospectus ID#46 – American Storage of Rockwall (0.5% 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 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. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The DBRS long-term rating scale definition indicates that ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

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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