DBRS Morningstar Confirm All Classes of Wells Fargo Commercial Mortgage Trust 2018-C45

DBRS Limited (DBRS Morningstar) confirmed the ratings of all classes of the Commercial Mortgage Pass-Through Certificates, Series 2018-C45 issued by Wells Fargo Commercial Mortgage Trust 2018-C45 as follows:

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

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction, which has remained in line with DBRS Morningstar’s expectations since issuance. The transaction consists of 49 loans secured by 89 commercial and multifamily properties. As of the December 2020 remittance, the pool had an aggregate principal balance of $653.9 million, representing a marginal collational reduction of 0.7% since issuance.

Loans representing 91.7% of the current pool balance are reporting partial-year 2020 figures. Based on these financials, those loans reported a weighted-average (WA) debt-service coverage ratio (DSCR) of 2.33 times (x). which is up slightly from the year-end (YE) 2019 figure of 2.26x. At issuance, two loans, representing 6.0% of the current pool balance, were shadow-rated investment grade. These loans include 181 Fremont Street (Prospectus ID#10) and CoolSprings Galleria (Prospectus ID#11). With this review, DBRS Morningstar confirms that the performance of these loans remains consistent with investment-grade loan characteristics. For additional information on these loans, please see the DBRS Viewpoint platform, for which information has been provided below.

As of the December 2020 remittance, there were two loans in special servicing, representing 3.0% of the current pool balance. The largest loan in special servicing is Prospectus ID#18 – Flats at East Bank, representing 2.0% of the current pool balance. The collateral is a mixed-use asset with a 247-unit multifamily component coupled with a 59,000-square-foot retail element, located in the waterfront district of Cleveland, Ohio. The loan transferred to special servicing in June 2020 for imminent monetary default after the borrower made a Coronavirus Disease (COVID-19)-related relief request. The servicer reported the loan was brought current for outstanding payments due between August 2020 and October 2020, but the loan later fell delinquent again and was reported outstanding for November and December with the December 2020 remittance. The servicer is working with the borrower to negotiate a loan modification, but no further details have been provided to date.

The second-largest loan in special servicing is Prospectus ID#30 – Hampton Inn Omaha West Dodge Road Old Mill, representing 1.0% of the current pool balance. The collateral is a 110-room limited-service hotel located in Omaha, Nebraska. The loan transferred to special servicing in June 2020 for delinquent debt service payments, with the borrower formally requesting payment relief as part of the loan’s transfer. As of the December 2020 remittance the loan was 121+ days delinquent and according to the servicer’s commentary, a workout strategy has not been finalized and negotiations for a loan modification remain ongoing. A July 2020 appraisal valued the collateral hotel at $5.7 million, down from $11.5 million at issuance.

As of the December 2020 remittance, there were nine loans on the servicer’s watchlist, representing 27.1% of the current pool balance. Only one of these loans is being monitored for DSCR declines from issuance; one is being monitored for a tenancy issue; four are being monitored for increased levels of risk due to the coronavirus pandemic; two are on the watchlist for deferred maintenance issues; and one loan is being monitored for late financial statement submissions. In general, DBRS Morningstar does not have any significant concerns at this time with any of the watchlisted loans.

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, and X-D 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#11 – CoolSprings Galleria (2.9% of the pool)
-- Prospectus ID#18 – Flats at East Bank (1.9% 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.

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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