Press Release

DBRS Morningstar Confirms All Classes and Assigned a Negative Trend on Five Classes on COMM 2016-CCRE28 Mortgage Trust

CMBS
January 13, 2021

DBRS, Inc. (DBRS Morningstar) confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28 issued by COMM 2016-CCRE28 Mortgage Trust:

-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-HR at AAA (sf)
-- Class A-M at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-HR at AAA (sf)
-- Class XP-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 (high) (sf)
-- Class X-C at BBB (sf)
-- Class E at BBB (low) (sf)
-- Class X-D at BBB (low) (sf)
-- Class F at BB (high) (sf)
-- Class G at BB (low) (sf)
-- Class X-E at B (sf)
-- Class H at B (low) (sf)

Classes G, X-E, and H were removed from Under Review with Negative Implications where they were placed on August 6, 2020. The trends on these classes are Negative. Additionally, the trends on Classes F and X-D 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 11.1% of the pool being in special servicing as of the December 2020 remittance, DBRS Morningstar also notes that the pool has a significant concentration in retail and hospitality properties, representing 23.7% and 16.5% 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 December 2020 remittance, 48 of the original 49 loans remain in the pool, representing a 5.7% reduction of collateral. There are six loans, representing 11.1% of the pool, with the special servicer, the largest of which is the Equitable City Center loan (Prospectus ID#6, 5.7% of the pool). This loan is secured by a 165,257-sf retail center in the Koreatown section of Los Angeles. Prior to the coronavirus pandemic, the loan had stable performance, reporting a healthy 2019 net cash flow (NCF) of $4.3 million and a debt service coverage ratio (DSCR) of 1.75 times (x). As of August 2020, occupancy was 70%, which is a 12% decline when compared with the issuance level. It appears that the second-largest tenant at issuance, Crystal Spa, which occupied 9% of the GLA, has vacated ahead of its scheduled lease expiration in 2029. The two largest tenants remaining are H-Mart, which occupies 18% of the GLA on a lease through 2030, and Seung Ae, which occupies 6% of the GLA on a lease through 2025. Overall, the rent roll is fairly granular as no other tenant represents more than 5% of the GLA. The servicer is reviewing the borrower's request for a long-term forbearance as the coronavirus pandemic damped rent collections. However, the LTV based on the September 2020 appraisal is reasonable at 73% and the loan does have strong sponsorship with David Lee, an experienced landlord in Koreatown, which mitigates some of the concern.

The Holiday Inn Fort Worth North Fossil Creek loan (Prospectus ID#28, 1.2% of the pool) is secured by a 126-room full-service hotel, which has been with the special servicer since 2018 when the borrower notified of its inability to cover shortfalls and inability to complete the property improvement project (PIP), which was due in 2018. An attempted property sale was unsuccessful in August 2020 and the plan continues to be to stabilize the asset’s performance and place it back on the market when the timing is more advantageous. A May 2020 appraisal valued the property at $8.7 million, which is below the $11.7 million loan balance.

There are eight loans, representing 16.9% of the pool, on the servicer’s watchlist. These loans are being monitored for various reasons including low DSCR or occupancy, tenant rollover risk, and/or pandemic-related forbearance requests. Three of the watchlist loans, collectively representing 10.5% of the pool balance, have been modified with either a maturity extension or temporary debt relief. The largest of these three is the Hyatt Regency St. Louis at The Arch loan (Prospectus ID#5, 5.3% of the pool balance), which had stable performance prior to the pandemic but struggled to keep up with its competition as reported by the STR reports. The loan received a temporary three-month suspension of reserve payments that will be repaid over a 12-month period. The Equity Inns Portfolio loan (Prospectus ID#10, 4.1% of the pool balance) received a two-year maturity extension, which pushed maturity to October 2022, and the loan will also be paid down by $3 million from October 2021 through October 2022. Lastly, the Springhill Suites - Huntsville loan (Prospectus ID#30, 1.1% of the pool balance) was also granted a temporary three-month suspension of reserve payments to be repaid over a 12-month period.

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-HR, XP-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 loan(s) in the transaction:

-- Prospectus ID#6 – Equitable City Center (5.7% 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.

DBRS Morningstar notes that this press release was amended on November 24, 2021, to remove language indicating that there was a material deviation on Class G.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology 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.

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.

DBRS, Inc.
22 West Washington Street
Chicago, IL 60602 USA
Tel. +1 312 696-6293

Ratings

  • Date IssuedDebt RatedRatingTrendActionAttributesi
    13-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28, Class A-2AAA (sf)StbConfirmed
    US
    13-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28, Class A-3AAA (sf)StbConfirmed
    US
    13-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28, Class A-4AAA (sf)StbConfirmed
    US
    13-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28, Class A-HRAAA (sf)StbConfirmed
    US
    13-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28, Class A-MAAA (sf)StbConfirmed
    US
    13-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28, Class A-SBAAA (sf)StbConfirmed
    US
    13-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28, Class X-AAAA (sf)StbConfirmed
    US
    13-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28, Class X-HRAAA (sf)StbConfirmed
    US
    13-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28, Class XP-AAAA (sf)StbConfirmed
    US
    13-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28, Class BAA (sf)StbConfirmed
    US
    13-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28, Class X-BA (high) (sf)StbConfirmed
    US
    13-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28, Class CA (sf)StbConfirmed
    US
    13-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28, Class DBBB (high) (sf)StbConfirmed
    US
    13-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28, Class X-CBBB (sf)StbConfirmed
    US
    13-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28, Class EBBB (low) (sf)StbConfirmed
    US
    13-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28, Class X-DBBB (low) (sf)NegTrend Change
    US
    13-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28, Class FBB (high) (sf)NegTrend Change
    US
    13-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28, Class GBB (low) (sf)NegConfirmed
    US
    13-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28, Class X-EB (sf)NegConfirmed
    US
    13-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2016-CCRE28, Class HB (low) (sf)NegConfirmed
    US
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COMM 2016-CCRE28 Mortgage Trust
  • 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.