Press Release

DBRS Morningstar Confirms All Classes of COMM 2015-CCRE27 Mortgage Trust, Negative Trends on Four Classes

CMBS
March 25, 2021

DBRS Limited (DBRS Morningstar) confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2015-CCRE27 issued by COMM 2015-CCRE27 Mortgage Trust as follows:

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

With this review, DBRS Morningstar also removed Classes E, X-D, F, X-E, and G from Under Review with Negative Implications, where they were placed on August 6, 2020. The trends on Classes X-D, F, X-E, and G are Negative, while all other trends are Stable.

The Negative trends reflect the increased risk to the trust in the concentration of loans in special servicing and on the servicer’s watchlist. As of the March 2021 reporting, 10 loans (representing 22.4% of current trust balance) are currently in special servicing, including three in the top 15 (representing 15.8% of the current trust balance). Eight of these 10 loans were transferred to the special servicer since the start of the Coronavirus Disease (COVID-19) pandemic. There are 14 loans (representing 16.3% of current trust balance) on the servicer’s watchlist, including three top 15 loans. The watchlisted loans are being monitored for various reasons including low debt service coverage ratios (DSCRs), activation of cash traps, occupancy declines, upcoming tenant rollover, and coronavirus-related borrower relief requests.

At issuance, the transaction consisted of 65 loans secured by 96 commercial properties, with an original trust balance of $931.6 million. As of the March 2021 remittance, 62 loans remained in the trust with an outstanding trust balance of $816.7 million, reflecting a collateral reduction of 12.5% since issuance because of the repayment of two loans, scheduled loan amortization of the trust, and the liquidation of one loan. The trust benefits from nine loans (10.4% of the current trust balance) that are fully defeased. The three largest property-type concentrations are multifamily (33.2% of the pool), retail (20.9% of the pool), and office (20.1% of the pool).

At issuance, DBRS Morningstar assigned an investment-grade shadow rating to one loan, 11 Madison Avenue (Prospectus ID#1, 7.8% of the current trust balance). With this review, DBRS Morningstar confirmed that the performance of this loan remains consistent with investment-grade loan characteristics.

The largest loan in special servicing, the NMS Los Angeles Multifamily Portfolio (Prospectus ID #2, 8.0% of the current trust balance), is secured by a portfolio of six multifamily properties, totaling 384 units, all within Los Angeles County, California. The loan transferred to special servicing in July 2020, following the borrower’s request for relief because of the coronavirus pandemic. As of the March 2021 reporting, the loan was late for the March payment, but less than 30 days delinquent, and the special servicer is awaiting further information from the borrower to evaluate the borrower's relief request. According to the trailing nine months ended September 30, 2020, reporting, the DSCR was 1.19 times (x). This compares with the YE2019 DSCR of 2.40x.

The portfolio performance was quite strong before the coronavirus pandemic, as the coverage was typically well above the issuance DSCR of 1.31x. The occupancy rate reported for September 2020 of 79.7% compares with 88.0% at YE2019 and 94.0% at YE2018, suggesting the reason for the borrower’s relief request is lower revenues and/or lower collections for tenants still in place. As the loan has generally remained current or within 30 days of the payment due date since the transfer to special servicing, the borrower appears to be committed to the loan, and DBRS Morningstar expects a return to the master servicer will be executed at some point in the near to moderate term.

The second-largest loan in special servicing, Midwest Shopping Center Portfolio (Prospectus ID#6, 4.2% of the current trust balance) is secured by a portfolio of six anchored retail centers totaling 889,413 square feet (sf) in Iowa (two properties, 45.5% of the net rentable area (NRA)), Illinois (two properties, 27.6% of the NRA), Oklahoma (15.2% of the NRA), and Missouri (11.7% of the NRA). The loan was transferred to the special servicer in July 2020, following the borrower’s request for relief because of the coronavirus pandemic. According to the special servicer, the borrower has been uncooperative and a mechanic’s lien has been filed against one or more properties in the portfolio, but no details have been provided to date. Negotiations between the special servicer remain ongoing and a receiver is being evaluated. As of the March 2021 reporting, the loan was listed as 60 days delinquent.

It is noteworthy that the loan sponsor, Natin Paul, the chief executive officer and founder of World Class Capital Group, LLC, has been under investigation by the FBI since 2019, according to various online news articles. The Texas Tribune reported on October 7, 2020, that Paul’s home and office had been raided in 2019 by FBI and U.S. Department of Treasury agents, but noted no criminal charges had been filed as of the date of the article. Paul and his firm have been widely reported to be in financial distress since 2019, with several ongoing lawsuits and bankruptcy cases. On February 9, 2021, the Austin Business Journal reported an arbitration ruling against Paul in the amount of $1.9 million, and a later story by the same paper, dated March 2, 2020, noted ongoing hearings surrounding the allegations that former Texas attorney general Ken Paxton used his office to assist Paul’s business dealings.

Prior to transfer to special servicer, this loan had been on the servicer’s watchlist since November 2019 for watchlist triggers including lease expirations, the borrower’s failure to submit financial statements, and the occurrence of a servicing trigger event (cash trap). The servicer was monitoring January 2020 lease expirations for five tenants representing 34.4% of the total NRA. All but one of those five tenants in Office Max renewed and the portfolio occupancy rate at April 2020 was reported at 81.9%, down from 90.0% at issuance. The YE2019 DSCR was 1.43x, compared with 1.34x at YE2018 and the DBRS Morningstar DSCR at issuance of 1.37x.

Given the outstanding issues for the sponsor and the uncertainty surrounding the workout for this loan, the risks are significantly increased from issuance, a contributing factor for the Negative trends as previously detailed.

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

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 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.

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 Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577

Ratings

  • Date IssuedDebt RatedRatingTrendActionAttributesi
    25-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2015-CCRE27, Class A-2AAA (sf)StbConfirmed
    CA
    25-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2015-CCRE27, Class A-3AAA (sf)StbConfirmed
    CA
    25-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2015-CCRE27, Class A-4AAA (sf)StbConfirmed
    CA
    25-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2015-CCRE27, Class A-MAAA (sf)StbConfirmed
    CA
    25-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2015-CCRE27, Class A-SBAAA (sf)StbConfirmed
    CA
    25-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2015-CCRE27, Class X-AAAA (sf)StbConfirmed
    CA
    25-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2015-CCRE27, Class BAA (sf)StbConfirmed
    CA
    25-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2015-CCRE27, Class X-BA (high) (sf)StbConfirmed
    CA
    25-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2015-CCRE27, Class CA (sf)StbConfirmed
    CA
    25-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2015-CCRE27, Class X-CBBB (sf)StbConfirmed
    CA
    25-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2015-CCRE27, Class DBBB (low) (sf)StbConfirmed
    CA
    25-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2015-CCRE27, Class EBB (low) (sf)StbConfirmed
    CA
    25-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2015-CCRE27, Class X-DBB (low) (sf)NegConfirmed
    CA
    25-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2015-CCRE27, Class FB (high) (sf)NegConfirmed
    CA
    25-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2015-CCRE27, Class X-EB (sf)NegConfirmed
    CA
    25-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2015-CCRE27, Class GB (low) (sf)NegConfirmed
    CA
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COMM 2015-CCRE27 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

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