DBRS Morningstar Upgrades One Class of A10 Permanent Asset Financing 2017-II, LLC

DBRS Limited (DBRS Morningstar) upgraded the rating on the following class of A10 Permanent Asset Financing 2017-II, LLC (the Issuer):

-- Class B Notes to A (sf) from A (low) (sf)

DBRS Morningstar also confirmed the ratings on the following classes:

-- Class A Notes at AAA (sf)
-- Class C Notes at BBB (low) (sf)

All trends are Stable.

The rating upgrade on Class B reflects the strong performance of the pool, which was upsized in 2019 to an aggregate ceiling balance of $400.0 million, with a funding period that expired in December 2020. With the end of the funding period, DBRS Morningstar’s analysis was based on the characteristics of the 38 loans in the transaction as of the March 2021 remittance, which reported an aggregate principal balance of approximately $290.7 million. Prior to the end of the funding period, DBRS Morningstar’s analysis considered a pool funded to the ceiling balance of $400.0 million. That analysis was based on a worst-case pool, based on concentration limits and eligibility requirements as defined in the trust indenture relating to the minimum subordination requirements. As the loans in the pool are generally of significantly better quality than those worst-case loans added to the hypothetical scenario, the resulting analysis for this review supported the rating upgrade and confirmations with Stable trends.

According to the March 2021 reporting, there are no loans on the servicer’s watchlist and no loans that have transferred to special servicing. In addition, none of the loans in the pool have missed a payment and the outstanding loans are generally structured with escrows and/or reserves. Based on the most recent 2020 quarterly reporting available for the loans in the pool, overall performance remained healthy, with a weighted-average (WA) debt service coverage ratio, WA occupancy rate, and WA loan-to-value ratio of 1.42 times, 92.3%, and 58.7%, respectively. In addition, the reported figures represented a WA net cash flow (NCF) growth of 10.1% over the Issuer’s NCF figures from issuance.

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.

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 issuance metrics and all historical surveillance commentary on the DBRS Viewpoint platform.

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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 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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