DBRS Confirms All Classes of MSJP 2015-HAUL Mortgage Trust

DBRS, Inc. (DBRS) confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2015-HAUL issued by MSJP 2015-HAUL Mortgage Trust as follows:

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

All trends are Stable.

The rating confirmations reflect the stable performance of the transaction, which consists of the $170.0 million trust loan secured by the fee simple interest in a portfolio of 105 self-storage properties totaling 32,519 units and 2.7 million rentable square feet (sf) across the United States. Each property is owned and operated under the U-Haul brand, ranging in size from a minimum of 89 units to a maximum of 958 units. The properties are situated across 35 states and were constructed between 1902 and 2003.

Per the June 2019 remittances, the whole mortgage loan had a total balance of $237.9 million and consists of six separate notes: A-1A, A-1B, A-2A, A-2B, A-3A and A-3B. The A-1A and A-1B notes, which totaled $67.9 million as of June 2019, are companion loans and were contributed to the JPMBB 2015-C32 (DBRS-rated) and MSBAM 2015-C27 (non- DBRS-rated) transactions. The whole loan has a 20-year term and amortizes on a 20-year schedule, wherein principal is first applied to the non-trust companion notes before being applied to the trust notes. The A-1A, A-1B, A-2A and A2B notes are pari passu; however, the A-3A and A-3B notes are subordinate. Beginning in Year 11 of the loan term, the trust notes will begin to amortize. The DBRS analysis is based on the outstanding whole loan amount as of the June 2019 remittance.

This loan is sponsored by AMERCO, the parent company of U-Haul, which is considered to be a strong sponsor given its extensive experience in the self-storage industry and ample financial means. As of March 31, 2019, the sponsor had a net worth of $3.8 billion with $11.9 billion in total assets and $8.2 billion in total liabilities. There is no limit on the guaranty provided by AMERCO.

The reported year-end (YE) 2018 amortizing debt service coverage ratio (DSCR) was 1.91 times (x) with a debt yield of 16.9% compared with the DBRS Term DSCR and DBRS Debt Yield at issuance of 1.18x and 9.2%, respectively. Comparatively, the servicer reported a YE2017 DSCR and a YE2016 DSCR of 1.96x and 1.93x, respectively. Since issuance, the portfolio has been reporting significantly higher Other Income as compared with issuance figures. DBRS believes this is likely due to truck rental income along with miscellaneous other income that is included in the reported other income for the portfolio that was not considered in DBRS’s analysis at issuance. When normalizing the reported other income to the ratio of the total revenue figure DBRS used at issuance, DBRS estimates that the YE2018 DSCR was approximately 1.36x based on real estate operations.

The portfolio has experienced gradual year-over-year declines in occupancy rates since issuance, with the December 2018 portfolio-wide occupancy rate reported at 85.6% compared with the issuance occupancy rate of 92.6%. DBRS expects performance of the portfolio to remain stable given the growth in rental rates and the diversity of locations throughout the portfolio. In consideration of the ongoing occupancy rate decline, DBRS applied a greater stress to the net cash flow within its analysis. It should be noted the pari passu note within the MSBAM 2015-C27 transaction has been on the servicer’s watchlist since August 2017 for various life safety items as determined by the annual site inspections performed for the servicer. DBRS does not believe these life safety issues will affect the financial performance of the portfolio.

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 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 this transaction.

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrs.com. The platform includes loan-level 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 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.

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