Press Release

DBRS Morningstar Downgrades Four Classes of BANK 2017-BNK6

CMBS
January 14, 2021

DBRS, Inc. (DBRS Morningstar) downgraded the ratings on four classes of Commercial Mortgage Pass-Through Certificates, Series 2017-BNK6 issued by BANK 2017-BNK6 as follows:

-- Class X-E to BB (high) (sf) from BBB (sf)
-- Class E to BB (sf) from BBB (low) (sf)
-- Class X-F to B (high) (sf) from BB (high) (sf)
-- Class F to B (sf) from BB (sf)

DBRS Morningstar also confirmed the ratings on the following classes:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- 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 B at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AA (high) (sf)
-- Class C at AA (sf)
-- Class X-D at A (low) (sf)
-- Class D at BBB (high) (sf)

All trends are Stable.

The rating downgrades reflect ongoing performance issues with select loans, specifically those in special servicing and those secured by hotel and retail properties, which the ongoing Coronavirus Disease (COVID-19) pandemic has disproportionately affected. As of the December 2020 reporting, there are two loans secured by hotel properties in special servicing, combining for 3.5% of the pool balance. In total, 25 loans in the transaction are secured by hotel and retail properties, representing 41.5% of the pool balance. There are also 25 loans on the servicer’s watchlist, representing 22.0% of the pool balance; however, 13 of these loans, representing 3.7% of the pool balance, are secured by co-op properties, which have minimal credit risk.

As of December 2020, the transaction is composed of 71 loans, totaling $908.2 million. One of the original 72 loans has been repaid, with total collateral reduction since issuance of 2.7%. The transaction benefits from a concentration of office collateral as nine loans, representing 26.9% of the current pool balance, are secured by office properties, which have shown greater initial resilience to cash flow declines during the pandemic. This includes the largest loan in the transaction, General Motors Building (Prospectus ID#1; 9.1% of the pool balance), which is secured by an office tower in Manhattan. The transaction also includes nine loans secured by self-storage properties, representing 10.9% of the current pool balance. Additionally, one loan, representing 0.9% of the current pool balance, has been defeased.

The largest loan in special servicing, Trumbull Marriott (Prospectus ID#12; 2.3% of the pool), is secured by a full-service hotel in Trumbull, Connecticut. The loan transferred to special servicing in May 2020 for imminent default and remains outstanding for the April 2020 debt service payment. According to the servicer, the borrower has elected to give the property back to the servicer and a stipulated receivership and friendly foreclosure is being negotiated with the receiver order expected to be signed in the immediate future. The property was re-appraised in August 2020 with an as is value of $14.5 million, a significant decline from the issuance value of $35.1 million. The appraiser also provided a projected stabilized value of $19.4 million by August 2023. While the loan is not expected to be resolved in the near future, based on the outstanding loan balance of $21.1 million, the ultimate resolution is expected to result in a significant realized loss to the trust. While the expected loss is projected to be contained to unrated bond, Class G, DBRS Morningstar expects the loss to materially affect the credit support to Class E and Class F.

The other loan in special servicing, Hilton Garden Inn Bozeman (Prospectus ID#23, 1.2% of the pool), is secured by a limited-service hotel in Bozeman, Montana. The loan transferred to special servicing in June 2020 for imminent default and remains outstanding for the April 2020 debt service payment. According to the servicer, negotiations with the borrower remain ongoing for a forbearance with an agreement expected to be completed in the near term that will include a deferral of debt service and reserve payments. The property was re-appraised in August 2020 with an as-is value of $18.2 million, a decline from the issuance value of $21.4 million. The appraiser also provided a projected stabilized value of $21.5 million to be achieved by September 2023. The loan remains above water with a balance of $11.2 million as of December 2020 and the borrower maintains hard equity of $7.1 million in the property, according to the servicer. The outstanding payment default and general challenges for the hotel industry, however, remain a factor; as such, in the analysis for this review, DBRS Morningstar made adjustments to account for the increased credit risk of the loan.

DBRS Morningstar maintains an investment-grade shadow rating on the General Motors Building (Prospectus ID#1; 9.9% of the pool), Gateway Net Lease Portfolio (Prospectus ID#2; 6.7% of the pool), and Del Amo Fashion Center (Prospectus ID#3; 6.7% of the pool) loans. DBRS Morningstar confirmed that the performance of these loans remains consistent with investment-grade loan characteristics.

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#1 – General Motors Building (9.9% of the pool)
-- Prospectus ID#2 – Gateway Net Lease Portfolio (6.7% of the pool)
-- Prospectus ID#3 – Del Amo Fashion Center (6.7% of the pool)
-- Prospectus ID#12 – Trumbull Marriott (2.3% of the pool)
-- Prospectus ID#21 – Hilton Garden Inn Bozeman (1.2% 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 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, Inc.
22 West Washington Street
Chicago, IL 60602 USA
Tel. +1 312 696-6293

Ratings

  • Date IssuedDebt RatedRatingTrendActionAttributesi
    14-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2017-BNK6, Class A-1AAA (sf)StbConfirmed
    US
    14-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2017-BNK6, Class A-2AAA (sf)StbConfirmed
    US
    14-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2017-BNK6, Class A-3AAA (sf)StbConfirmed
    US
    14-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2017-BNK6, Class A-4AAA (sf)StbConfirmed
    US
    14-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2017-BNK6, Class A-5AAA (sf)StbConfirmed
    US
    14-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2017-BNK6, Class A-SAAA (sf)StbConfirmed
    US
    14-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2017-BNK6, Class A-SBAAA (sf)StbConfirmed
    US
    14-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2017-BNK6, Class BAAA (sf)StbConfirmed
    US
    14-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2017-BNK6, Class X-AAAA (sf)StbConfirmed
    US
    14-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2017-BNK6, Class X-BAA (high) (sf)StbConfirmed
    US
    14-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2017-BNK6, Class CAA (sf)StbConfirmed
    US
    14-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2017-BNK6, Class X-DA (low) (sf)StbConfirmed
    US
    14-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2017-BNK6, Class DBBB (high) (sf)StbConfirmed
    US
    14-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2017-BNK6, Class X-EBB (high) (sf)StbDowngraded
    US
    14-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2017-BNK6, Class EBB (sf)StbDowngraded
    US
    14-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2017-BNK6, Class X-FB (high) (sf)StbDowngraded
    US
    14-Jan-21Commercial Mortgage Pass-Through Certificates, Series 2017-BNK6, Class FB (sf)StbDowngraded
    US
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BANK 2017-BNK6
  • 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.