DBRS Morningstar Confirms All Classes of Wells Fargo Commercial Mortgage Trust 2015-NXS3

DBRS, Inc. (DBRS Morningstar) confirmed all classes of Commercial Mortgage Pass-Through Certificates, Series 2015-NXS3 (the Certificates) issued by Wells Fargo Commercial Mortgage Trust 2015-NXS3 as follows:

-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class PEX at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class X-D at BBB (low) (sf)
-- Class X-E at BB (sf)
-- Class E at BB (low) (sf)
-- Class X-FG at B (high) (sf)
-- Class F at B (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction, which has paid down by 32.1% since issuance, with a significant portion of the overall collateral reduction occurring in the last year when $155.9 million of principal was repaid. As of the February 2021 remittance, the trust collateral consists of 49 of the original 56 loans, totaling $553.2 million. The transaction also benefits from defeasance collateral, as four loans, representing 5.1% of the current pool balance, are defeased.

The transaction has exposure to retail and hotel properties, representing 40.5% and 21.1% of the current pool balance, respectively, which have been disproportionately affected by the ongoing Coronavirus Disease (COVID-19) pandemic. This risk is partially mitigated as seven loans, representing 21.3% of the pool, are secured by retail properties with grocery anchor tenants, which provide a stable demand driver and revenue source for the respective properties. The transaction also has a concentration of office properties that have shown greater resilience during these first phases of the pandemic. In total, eight loans, representing 16.0% of the pool, are secured by office properties, including 11 Madison Avenue (Prospectus ID#6; 6.3% of the pool), which is secured by an office tower in Midtown Manhattan.

As of the February 2021 reporting, one loan, representing 10.8% of the pool, is in special servicing and 16 loans, representing 23.9% of the pool, are on the servicer’s watchlist; however, seven of those loans, representing 4.4% of the pool, are secured by co-operative properties, which have minimal credit risk. The specially serviced loan, Yosemite Resorts (Prospectus ID#3; 10.8% of pool), is secured by a portfolio of two limited-service hotels in El Portal, California. The loan transferred to special servicing in July 2020 as a result of performance declines caused by the ongoing coronavirus pandemic. The loan is delinquent, having been most recently paid in May 2020, but the servicer has obtained an updated appraisal that suggests the as-is value remains comfortably above the trust exposure. The servicer and borrower continue to negotiate the workout strategy. For additional information on this loan, please see the loan commentary on the DBRS Viewpoint platform, for which information has been provided below.

DBRS Morningstar maintains an investment-grade shadow rating on the 11 Madison Avenue and The Parking Spot LAX (Prospectus ID#15; 2.4% 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 can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

Classes X-A, X-D, X-E, and X-FG 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 – Yosemite Resorts (10.8% of the pool)
-- Prospectus ID#5 – Hilton Nashville (8.2% 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 [email protected].

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