DBRS Morningstar Confirms All Classes of Real Estate Asset Liquidity Trust, Series 2015-1

DBRS Limited (DBRS Morningstar) confirmed its ratings on the classes of Commercial Mortgage Pass-Through Certificates, Series 2015-1 issued by Real Estate Asset Liquidity Trust, Series 2015-1 as follows:

--Class A-1 at AAA (sf)
--Class A-2 at AAA (sf)
--Class B at AA (high) (sf)
--Class C at AA (sf)
--Class X at AA (sf)
--Class D at A (low) (sf)
--Class E at BBB (low) (sf)
--Class F at BB (sf)
--Class G at B (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction, which has generally remained in line with DBRS Morningsar’s expectations since issuance. As of the February 2020 remittance, there has been a collateral reduction of 19.0% since issuance, with 40 of the 46 original loans remaining in the pool.

Loans representing 97.8% of the current pool balance are reporting year-end (YE) 2019 or YE2018 figures, with a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 1.76 times (x) and 12.7%, respectively. The largest 15 loans represent 77.7% of the pool and reported YE2019 or YE2018 financials, with a WA DSCR and debt yield of 1.77x and 12.4%, respectively, representing a WA net cash flow growth of 18.1% over the DBRS Morningstar net cash flow figures derived at issuance.

As of the February 2020 remittance, there are two loans on the servicer’s watchlist, representing 10.9% of the pool, including the largest loan, Alta Vista Manor Reitrement Ottawa (Prospectus ID#1, 9.9% of the pool balance). This loan is secured by a luxury retirement home located in Ottawa, Ontario, and was placed on the servicer’s watchlist due to a decline in net cash flow as a result of a decline in revenue that resulted from an occupancy drop for the property. At YE2017, the property reported an occupancy rate of 68.4%, but occupancy improved to 81.1% as of the March 2019 rent roll. During this period of depressed occupancy, the YE2017 and YE2018 DSCRs were reported at 0.81x and 0.28x, respectively. Despite the low in-place cash flows, DBRS Morningstar believes the overall risk remains healthy as this loan has full recourse to the sponsor, Regal Lifestyle Communities, which was acquired by Revera, Inc. and Welltower (formerly known as Health Care REIT) in June 2015.

At issuance, DBRS Morningstar shadow-rated the U-Haul SAC 3 Portfolio loan as investment grade. The loan is secured by a portfolio of 10 individual loans backed by self-storage properties across Ontario. With this review, DBRS Morningstar has confirmed that the performance of the loan remains consistent with investment-grade loan characteristics.

Class X is an interest-only (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 Morningstar.

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

-- Prospectus ID#1 – Alta Vista Manor Retirement Ottawa (9.9% of the pool)
-- Prospectus ID#15 – York Industrial Leduc (2.4% 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 Morningstar rated), as well as loan-level and transaction-level commentary for most DBRS Morningstar-rated and -monitored transactions.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The principal methodology is the 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 Morningstar 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.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883/.

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 Morningstar 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 Morningstar 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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