DBRS Morningstar Upgrades Three Classes of MSJP 2015-HAUL Mortgage Trust

DBRS, Inc. (DBRS Morningstar) upgraded the ratings on three classes of the Commercial Mortgage Pass-Through Certificates issued by MSJP 2015-HAUL Mortgage Trust (the Issuer) as follows:

-- Class X-B to AAA (sf) from AA (high) (sf)
-- Class B to AA (high) (sf) from AA (sf)
-- Class C to AA (sf) from AA (low) (sf)

DBRS Morningstar also confirmed the ratings on the remaining classes as follows:

-- Class A at AAA (sf)
-- Class X-A at AAA (sf)
-- Class D at A (sf)
-- Class E at BBB (low) (sf)

All trends are Stable.

The rating upgrades reflect the continued stable performance of the transaction and the amortization of the whole loan, which totals 18.9% since issuance. The subject transaction consists of a $170.0 million trust loan secured by the fee simple interest in a multistate portfolio of 105 self-storage properties totaling 32,519 units and 2.7 million rentable square feet (sf). Each property is owned and operated under the U-Haul brand, ranging in size from 89 units to 958 units. The properties are situated across 35 states and were originally constructed between 1902 and 2003.

According to the May 2021 remittances, the whole mortgage loan had a total balance of $219.0 million consisting of six separate notes: A-1A, A-1B, A-2A, A-2B, A-3A, and A-3B. The A-1A and A-1B notes, which totaled $49.0 million as of May 2021, are companion loans and were contributed to the JPMBB 2015-C32 (DBRS Morningstar-rated) and MSBAM 2015-C27 (non-DBRS Morningstar-rated) transactions. The whole loan has a 20-year term and amortizes on a 20-year schedule, wherein the principal is first applied to the nontrust companion notes before being applied to the trust notes. The A-1A, A-1B, A-2A, and A2B notes are pari passu; however, the A-3A and A-3B notes are subordinate. In Year 11 of the loan term, the trust notes will begin to amortize. This loan is sponsored by AMERCO, the parent company of U-Haul, which is considered to be a strong sponsor, given its extensive experience in the self-storage industry and ample financial means. There is no limit on the guaranty provided by AMERCO.

The reported YE2020 amortizing debt service coverage ratio (DSCR) was 2.07 times (x) with a debt yield of 20.0% compared with the DBRS Morningstar Term DSCR and DBRS Morningstar Debt Yield at issuance of 1.18x and 9.2%, respectively. In comparison, the servicer reported a YE2019 DSCR and a YE2018 DSCR of 1.89x and 1.91x, respectively. Since issuance, the portfolio has been reporting significantly higher Other Income compared with issuance figures. DBRS Morningstar believes this is likely because truck rental income and miscellaneous income are included in the reported Other Income for the portfolio, which were not considered in DBRS Morningstar’s analysis at issuance. When normalizing the reported Other Income to the ratio of the total revenue figure DBRS Morningstar used at issuance, DBRS Morningstar estimates that the YE2020 DSCR was approximately 1.45x, based on real estate operations.

The portfolio had experienced gradual year-over-year declines in occupancy rates since issuance; however, the December 2020 portfolio-wide occupancy rate was reported at 88.1%, an improvement over the December 2019 reported figure of 84.2% but still below the issuance occupancy rate of 92.6%. DBRS Morningstar expects the performance of the portfolio to remain stable, given the growth in rental rates and the diversity of locations throughout the portfolio.

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 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.

The DBRS Morningstar 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 US dollars unless otherwise noted.

The principal methodology is the 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 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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