Press Release

DBRS Morningstar Confirms All Classes of COMM 2015-LC21 Mortgage Trust

CMBS
March 26, 2020

DBRS Limited (DBRS Morningstar) confirmed the ratings on the following classes of the Commercial Pass-Through Certificates, Series 2015-LC21 issued by COMM 2015-LC21 Mortgage Trust:

-- Class A-2 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-M at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (low) (sf)
-- Class X-B at A (sf)
-- Class C at A (low) (sf)
-- Class X-C at BBB (sf)
-- Class D at BBB (low) (sf)
-- Class X-D at BB (sf)
-- Class E at BB (low) (sf)
-- Class X-E at B (sf)
-- Class F at B (low) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction. As of the March 2020 remittance,
97 of the original 103 loans remained in the pool with collateral reduction of 16.7% since issuance caused by scheduled loan amortization and loan repayments. Six loans, representing 4.2% of the pool, are fully defeased.

Based on the most recent year-end (YE) reporting, the pool had a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 1.58 times (x) and 9.5%, respectively, compared with the DBRS Morningstar figures of 1.45x and 8.3%, respectively, derived at issuance. The former largest loan in the pool, Courtyard by Marriott Portfolio, representing 7.3% of the original pool balance, was repaid in full with the February 2020 remittance. At issuance, the loan had a DBRS Morningstar whole-loan DSCR and debt yield of 3.14x and 11.8%, respectively.

As of the March 2020 remittance, two loans, representing 0.8% of the pool, were in special servicing. Both loans were previously showing as delinquent and were made current with the March 2020 payment date. In addition, 10 loans, representing 10.4% of the pool, were on the servicer’s watchlist and all but one was flagged for performance-related reasons. Three of the watchlisted loans, representing 3.9% of the pool, are secured by office properties—Anchorage Business Park (Prospectus ID#11; 2.1% of the pool) in Anchorage, Alaska, as well as Honeywell Building (Prospectus ID#27; 1.6% of the pool) and Bear Creek Office (Prospectus ID#93; 0.3% of the pool) in Houston, Texas. Over the last few years, both markets have been heavily affected by the sustained downturn in the oil and gas markets, which contributed to performance declines for all three loans.

The pool has a notable concentration of loans backed by hotel properties, which represented 14.5 of the pool balance as of the March 2020 remittance. The largest hotel loan in the pool, Courtyard by Marriot Pasadena (Prospectus ID#2; 6.1% of the pool) is secured by a 314-key limited-service hotel in Pasadena, California, approximately 10 miles northeast of Los Angeles. Based on Q3 2019 annualized financials, the loan experienced a 13.7% net cash flow (NCF) decline from YE2018 but is still operating at 1.58x coverage, in line with the DBRS Term DSCR derived of 1.53x at issuance. The recent trend in NCF is noteworthy, given the ongoing Coronavirus Disease (COVID-19) pandemic, which has halted business and leisure travel in the United States and around the world as hotels report sharp declines in occupancy rates that will likely hold through the near to medium term. DBRS Morningstar requested specific information with regard to the coronavirus-related impact on larger hotel loans in this and other rated pools and will provide updated commentary on the DBRS Viewpoint platform as information becomes available.

DBRS Morningstar is also monitoring another top 10 loan on the watchlist, University Fountains at Lubbock (Prospectus ID#7; 2.5% of the pool), which is secured by a 228-unit (683-bed) student housing complex in Lubbock, Texas. This loan is also on the DBRS Morningstar Hotlist. The loan’s amortizing DSCR was most recently reported at 0.61x for the trailing 12-month period ending September 2019 (in-place DSCR of 0.89x). Although the property has historically maintained healthy occupancy levels near 95%, cash flows have declined sharply since issuance because of lower revenues and increased operating expenses.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

Classes X-A, X-B, X-C, X-D, and X-E 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 Morningstar.

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

-- Prospectus ID#7 – University Fountains at Lubbock (2.5% of the pool)
-- Prospectus ID#11 – Anchorage Business Park (2.1% of the pool)
-- Prospectus ID#27 – Honeywell Building (1.6% of the pool)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.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 U.S. dollars unless otherwise noted.

The principal methodology is North American CMBS Surveillance Methodology, which can be found on dbrsmorningstar.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 dbrsmorningstar.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.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

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.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577

Ratings

  • 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

ALL MORNINGSTAR DBRS RATINGS ARE SUBJECT TO DISCLAIMERS AND CERTAIN LIMITATIONS. PLEASE READ THESE DISCLAIMERS AND LIMITATIONS AND ADDITIONAL INFORMATION REGARDING MORNINGSTAR DBRS RATINGS, INCLUDING DEFINITIONS, POLICIES, RATING SCALES AND METHODOLOGIES.