DBRS Morningstar Confirms All Classes of BAMLL Commercial Mortgage Securities Trust 2016-SS1

DBRS Limited (DBRS Morningstar) confirmed the ratings on the Commercial Mortgage Pass-Through Certificates issued by BAMLL Commercial Mortgage Securities Trust 2016-SS1 as follows:

-- Class A at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (sf)
-- Class X-B at AA (low) (sf)
-- Class C at A (high) (sf)
-- Class D at A (low) (sf)
-- Class E at BBB (low) (sf)
-- Class F at BB (low) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since the prior ratings review. The underlying loan is secured by the fee-simple interest in a 501,650-square foot (sf) single-tenant office building and an adjacent 965-space parking garage structure located in Boston’s Seaport District. The $166.0 million fixed-rate loan is fully interest only (IO) through the 10-year term and is sponsored by Tishman Speyer, which injected $152.7 million of cash equity into the transaction at issuance.

The office was built-to-suit for the tenant in 2014 and remains fully occupied by State Street Corporation (State Street), an investment-grade tenant rated AA with a Stable trend by DBRS Morningstar. As of the December 2020 rent roll, the property remains 100.0% occupied by State Street at a triple net rental rate of $27.50 per square foot (psf), with the next rent step occurring in January 2025, which will take the rent to $28.50 psf. The loan reported a debt service coverage ratio (DSCR) of 2.10 times (x), which is higher than the YE2019 DSCR of 1.92x and the DBRS Morningstar term DSCR derived at issuance of 2.05x. The garage portion of the property operates under a three-year lease with VPNE Parking Solutions with a lease expiry in December 2021 and a base rent of approximately $3.0 million annually, with a guaranteed minimum occupancy of 25.9% at all times as State Street is required to lease 250 spaces. The loan was also structured with a cash sweep period commencing in the event of State Street occupying, or giving notice to occupy, less than 50.0% of the rentable square footage.

According to a Q4 2020 Reis report, the property fell under the South Station/Ft. Point Channel submarket, which reported an average asking rent of $50.05 psf and an average vacancy rate of 8.8% for office properties. The tenant’s lease was negotiated during 2011 and 2012 when the market was soft, resulting in below-market rents, suggestive of additional incentive for the tenant to stay as the company recently announced its plans to reduce costs and has reduced its real estate footprint by approximately 1.0 million sf, according to a January 2021 article from Boston Business Journal. While State Street has been reducing its real estate footprint, the tenant remains at the subject property and was not listed for any availability.

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 and X-B are 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.

The DBRS Viewpoint platform provides additional information on this transaction and underlying loans including DBRS Morningstar metrics, commentary, servicer-reported cash flows, and other performance-related data.

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 26, 2021), 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 [email protected].

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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