DBRS Confirms Ratings of Greystone Commercial Real Estate Notes 2017-FL1

DBRS Limited (DBRS) confirmed the ratings on the following classes of secured Floating-Rate Notes issued by Greystone Commercial Real Estate Notes 2017-FL1 (the Issuer):

-- Class A Notes at AAA (sf)
-- Class B Notes at AA (low) (sf)
-- Class C Notes at BBB (low) (sf)

All trends are Stable.

The transaction also features Senior and Junior Preferred Shares that are Non-Offered Notes and are retained by the Issuer.

The rating confirmations reflect the stable performance of the transaction, which has remained in line with DBRS’s expectations since issuance. At issuance, the collateral for the transaction consisted of 25 floating-rate mortgages secured by 27 transitional multifamily properties with a total balance of $366.6 million. The transaction has a Reinvestment Period that is scheduled to expire in September 2019, whereby the Issuer can substitute collateral in the pool, subject to certain Eligibility Criteria, including the rating agency condition by DBRS. Since issuance, 18 of the original 25 loans have repaid out of the trust; 26 loans were added to the pool with redeployed funds between June 2017 and February 2019. Of the 26 reinvestment loans, eight loans have repaid from the trust during the reinvestment period. As of the February 2019 remittance, there are 25 floating-rate loans outstanding in the pool secured by transitional assets in various stages of stabilization.

Based on recently reported quarterly financials and servicer updates, most of the collateral properties have stabilized or remain in a period of transition. The loans are all secured by multifamily properties. Additionally, student housing exposure for the trust is capped at 10.0% during the Reinvestment Period per the Eligibility Criteria. The current loans in the pool are considered high leverage on a per-unit basis, with the weighted-average current debt yield at 6.1% based on the DBRS As-Is Cash Flows and the current outstanding trust balances; however, the assets are generally well positioned to stabilize with viable business plans. As of the February 2019 remittance, there are no loans in special servicing and three loans on the servicer’s watchlist, representing 10.1% of the current pool balance. These loans have generally been flagged due to a downward trend in financial performance and occupancy rates, as the sponsors are in the process of executing their respective stabilization plans.

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#4 – Steeplechase Apartments (6.8% of the pool balance)
-- Prospectus ID#18 – Hartford at Anchor Point Apts (1.9% of the pool balance)

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. 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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