Press Release

DBRS Confirms All Classes of BXP Trust 2017-CC

CMBS
August 01, 2019

DBRS Limited (DBRS) confirmed the ratings of Commercial Mortgage Pass-Through Certificates, Series 2017-CC issued by BXP Trust 2017-CC as follows:

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

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance. This transaction consists of a ten-year, fixed-rate $350.0 million loan secured by Colorado Center in Santa Monica, California, that is interest only (IO) throughout the entire loan term. The trust loan is part of a split-loan structure, with an aggregate outstanding whole-loan balance of $550.0 million. The collateral is an office park consisting of six Class A buildings totaling 1.2 million square feet and a three-level underground parking garage situated on a 15.0-acre plot of land. The property is located approximately 1.5 miles northeast of downtown Santa Monica, in the heart of the city’s media and entertainment area. According to the Q1 2019 financials, the loan reported an annualized DSCR of 3.21 times (x), compared with the YE2018 ratio of 2.60x and the DBRS Term DSCR derived at issuance of 2.24x.

The office park was originally built in 1984 and underwent renovations in 2004 and more recently in 2018. The sponsor, Boston Properties, Inc., injected $18.0 million in improvements into the property in 2018 to improve the overall marketability of the subject within the submarket. Renovations included major updates to Building B, including demolishing and redemising the ground floor; constructing two new elevator lobbies; adding new common restrooms; and relocating the mechanical, electrical and plumbing infrastructure. Renovations also included the addition of patio spaces, amphitheatre, site lighting and improved wayfinding throughout the site.

As of the March 2019 rent roll, the subject was 95.8% occupied, an increase compared with the March 2018 occupancy rate of 83.9%. The three largest tenants are Hulu (22.3% of NRA, lease expires in November 2021), Edmunds.com Inc. (Edmunds; 16.6% of NRA, lease expires in January 2028) and Rubin Postaer and Associates (RPA; 14.1% of NRA, lease expires in December 2025). HBO (10.9% of NRA) recently signed an 18-month extension option to December 2020 at which point it will most likely be moving to its location in Culver City, California. The servicer has stated that Hulu is in deep negotiations to potentially occupy HBO’s space when it becomes available at YE2020, but nothing has been confirmed at the time of this press release. At issuance, DBRS noted that existing tenant, Edmunds (which houses its headquarters at the subject), was expected at last review to expand into the third floor of the 2401 Colorado Avenue building at a ten-year term beginning in August 2018 and has been confirmed by the servicer. In addition to Edmunds, the subject also serves as the headquarters for Hulu, RPA and Kite Pharma, Inc.

DBRS believes the property is well positioned within the market given the sponsor’s recent capital investment and plans for additional upgrades to improve the property’s competitive standing. The market dynamics remain stable from issuance, with REIS reporting a Q1 2019 office vacancy rate of 10.9% with an average rental rate of $61.91 per square foot in the Santa Monica submarket.

Class X-A is an IO certificate that references 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 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.

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada

Ratings

BXP Trust 2017-CC
  • Date Issued:Aug 1, 2019
  • Rating Action:Confirmed
  • Ratings:AAA (sf)
  • Trend:Stb
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Aug 1, 2019
  • Rating Action:Confirmed
  • Ratings:AAA (sf)
  • Trend:Stb
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Aug 1, 2019
  • Rating Action:Confirmed
  • Ratings:AA (low) (sf)
  • Trend:Stb
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Aug 1, 2019
  • Rating Action:Confirmed
  • Ratings:A (low) (sf)
  • Trend:Stb
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Aug 1, 2019
  • Rating Action:Confirmed
  • Ratings:BBB (sf)
  • Trend:Stb
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Aug 1, 2019
  • Rating Action:Confirmed
  • Ratings:BB (sf)
  • Trend:Stb
  • Rating Recovery:
  • Issued:CA
  • US = Lead Analyst based in USA
  • CA = Lead Analyst based in Canada
  • EU = Lead Analyst based in EU
  • UK = Lead Analyst based in UK
  • E = EU endorsed
  • U = UK endorsed
  • Unsolicited Participating With Access
  • Unsolicited Participating Without Access
  • Unsolicited Non-participating

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