Press Release

DBRS Morningstar Confirms All Classes of DBGS 2018-C1 Mortgage Trust, Removes Three Classes From Under Review with Negative Implications

CMBS
December 16, 2020

DBRS, Inc. (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass-Through Certificates, Series 2018-C1 issued by DBGS 2018-C1 Mortgage Trust as follows:

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

Classes F, G-RR, and X-F were removed from Under Review with Negative Implications, where they were placed on August 6, 2020. All trends are Stable. However, there are continued performance challenges for the underlying collateral, many of which have been driven by the impact of the Coronavirus Disease (COVID-19) pandemic. One loan, representing 1.9% of the pool, was in special servicing as of the November 2020 remittance. DBRS Morningstar also notes that the pool does not have any lodging properties but does have a moderate concentration of retail properties, representing 29.8% of the pool balance. This property type has been the most severely affected by the initial impact of the coronavirus pandemic and, as such, this concentrations is suggestive of slightly increased risks for the pool, particularly at the lower rating categories, since issuance.

The transaction is concentrated by property type as 12 loans, representing 36.6% of the current trust balance, are secured by office assets, whereas 14 loans, representing 29.8% of the current trust balance, are secured by retail assets. Mixed-use collateral makes up the third-largest concentration, representing four loans and 14.7% of the current trust balance. According to the November 2020 remittance, there was one loan, representing 1.9% of the current trust balance, in special servicing. The loan is secured by a retail asset: 9039 Sunset (Prospectus ID#21).

The 9039 Sunset asset is secured by a 11,735-square foot retail building in West Hollywood, California, and was transferred to the special servicer in July 2020, given the ongoing effects of the coronavirus pandemic. The single-tenant property is 100% leased to 1 Oak, which operates as a nightclub, with an initial lease expiration of September 2023. In addition, the subject includes a rooftop billboard and LED digital wall signage, which is leased to Outfront Media. The loan advanced to 121-plus days past due in November. As of November 2020, the servicer reported the workout strategy as foreclosure. At issuance, the collateral for the loan had an appraisal value of $31.2 million, equating to a loan-to-value ratio of 64.1%. Given these increased risks from issuance, the loan’s delinquency status, and concerns with the existing single tenant, DBRS Morningstar liquidated the loan in the analysis for this review. In this scenario the loan remained insulated from incurring a loss.

As of the November 2020 remittance, all 37 original loans remain in the pool, with a collateral reduction of only 0.5% since issuance as a result of loan amortization. No loans have defeased. Additionally, there are four loans, representing 8.4% of the current trust balance, on the servicer’s watchlist. These loans are being monitored for a variety of reasons including low debt service coverage ratio, occupancy, and deferred maintenance issues.

At issuance, DBRS Morningstar assigned an investment-grade shadow rating to nine loans: Moffett Towers - Buildings E, F, G (Prospectus ID#1, 7.5% of the current trust balance); Christiana Mall (Prospectus ID#5, 5.0% of the current trust balance); Aventura Mall (Prospectus ID#6, 4.4% of the current trust balance); 90-100 John Street (Prospectus ID#7, 3.9% of the current trust balance); Carolinas 7-Eleven Portfolio (Prospectus ID#8, 3.8% of the current trust balance); The Gateway (Prospectus ID#10, 3.5% of the current trust balance); 601 McCarthy (Prospectus ID#13, 2.9% of the current trust balance); West Coast Albertsons Portfolio (Prospectus ID#14, 2.7% of the current trust balance); and Moffett Towers II - Building 1 (Prospectus ID#18, 2.3% of the current trust balance). DBRS Morningstar confirmed that the performance of these loans remains consistent with the investment-grade loan characteristics

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, 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 this transaction.

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

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

DBRS, Inc.
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Ratings

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