DBRS Morningstar Confirms Ratings on CSAIL 2016-C6 Commercial Mortgage Trust; Removes Four Classes from Under Review with Negative Implications

DBRS Limited (DBRS Morningstar) confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2016-C6 issued by CSAIL 2016-C6 Commercial Mortgage Trust as follows:

-- Class A-4 at AAA (sf)
-- Class A-5 at AAA (sf)
-- Class A-S at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class X-D at BBB (sf)
-- Class D at BBB (low) (sf)
-- Class X-E at BB (sf)
-- Class E at BB (low) (sf)
-- Class X-F at B (sf)
-- Class F at B (low) (sf)

In addition, DBRS Morningstar discontinued the rating on Class A-3 as it was paid out as of the November 2020 remittance.

Classes E, F, X-E, and X-F were removed from Under Review with Negative Implications where they were placed on August 6, 2020. The trends on these classes are Negative. All other trends are Stable. The Negative trends reflect the continued performance challenges for the underlying collateral, much of which has been driven by the impact of the Coronavirus Disease (COVID-19) pandemic. In addition to loans representing 6.3% of the pool being in special servicing as of the November 2020 remittance, DBRS Morningstar also notes that the pool has a significant concentration of retail and hospitality properties, representing 24.7% and 12.9% of the pool balance, respectively. These property types have been the most severely affected by the initial effects of the coronavirus pandemic and, as such, those concentrations suggest increased risks for the pool, particularly at the lower rating categories, since issuance.

As of the November 2020 remittance, 46 of the original 50 loans remain in the pool, representing a collateral reduction of 23.3% since issuance. Four loans, representing 6.3% of the pool, are in special servicing, the largest of which, Chicago Marriott Southwest at Burr Ridge (Prospectus ID#11, 3.4% of the pool), is secured by a struggling hotel property. Additionally, 14 loans, representing 30.7% of the pool, are on the servicer’s watchlist. These loans are being monitored for various reasons, including low debt service coverage ratio (DSCR) or occupancy, tenant rollover risk, and/or pandemic-related forbearance requests.

Quaker Bridge Mall (Prospectus ID#3, 11.3% of the pool) was added to the servicer’s watchlist as of the November 2020 remittance after the loan fell behind on its debt service payments, which are now 60-89 days delinquent. The loan is secured by the interior portion of a 1.1 million square foot (sf) Simon-operated regional mall located in Lawrence Township, New Jersey, that has seen two of its four noncollateral anchor tenants vacate in the last two years. Sears vacated its space in September 2018 and, as of August 2020, Lord & Taylor has notified management that it would be closing its store following its bankruptcy filing. There are no leasing updates on either of these anchor spaces. The loan is expected to transfer to special servicing in the upcoming months as the servicer commentary notes that the loan’s B-note holder has informed that servicer that it will not be curing default. The two B-notes total $30.0 million and are subordinate to the $150.0 million A-notes which are securitized in two commercial mortgage-backed security (CMBS) transactions. Given the risks surrounding the collateral property, this loan was analyzed with an elevated probability of default for this review.

The largest loan in special servicing, Chicago Marriott Southwest at Burr Ridge, transferred to special servicing in May 2020 for imminent monetary default related to the coronavirus pandemic. The collateral is a full-service hotel located in Burr Ridge, Illinois, 15 miles southwest of the Chicago central business district. The loan had previously been a strong performer, reporting a YE2019 DSCR of 2.06 times (x) and YE2018 DSCR of 1.99x, but has struggled in 2020 because of the pandemic, which has prevented the property from utilizing its over 10,000 sf of meeting space, the largest in the competitive market. The borrower has stated that it will be unable to make full debt service payments, however, partial payments have been remitted. The five-year loan matures in March 2021 and the lender and borrower have entered into a forbearance agreement to bring the loan current and allow for two six-month extension options beyond the loan’s maturity date. According to a June 2020 appraisal, the collateral was valued at $23.0 million, down from the issuance value of $35.4 million. This loan was analyzed with an elevated probability of default for this review. For more information on these loans, please visit www.viewpoint.dbrsmorningstar.com.

ESG CONSIDERATIONS
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-D, X-E, and X-F 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#3 – Quaker Bridge Mall (11.3% of the pool)
-- Prospectus ID#11 – Chicago Marriott Southwest at Burr Ridge (3.4% 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 the North American CMBS Surveillance Methodology (March 6, 2020), 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.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905

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@dbrsmorningstar.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.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar’s outlooks and ratings are monitored.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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