DBRS Morningstar Confirms All Classes of CSAIL 2016-C6 Commercial Mortgage Trust

DBRS Limited (DBRS Morningstar) confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2016-C6 issued by CSAIL 2016-C6 Commercial Mortgage Trust as follows:

-- Class A-4 at AAA (sf)
-- Class A-5 at AAA (sf)
-- Class A-S at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class X-D at BBB (sf)
-- Class D at BBB (low) (sf)
-- Class X-E at BB (sf)
-- Class E at BB (low) (sf)
-- Class X-F at B (sf)
-- Class F at B (low) (sf)

All trends are Stable, with the exception of classes X-E, E, X-F and F, which carry a Negative trend. The Negative trends reflect the continued performance challenges for the underlying collateral, particularly with the Quaker Bridge Mall loan (Prospectus ID#3, 11.7% of the pool), which has been specially serviced since November 2020. The mall received an updated as-is appraised value of $168.0 million as of February 2021, well below the appraised value at issuance of $333.0 million. Based on this most recent valuation, any potential future losses related to this loan would be limited to the unrated class, but concerns regarding further value deterioration persist.

As of the June 2021 remittance, 44 of the original 50 loans remain in the pool, representing a collateral reduction of 28.3% since issuance. Since November 2020, two specially serviced loans comprising 6.3% of the pool were completely repaid. Three loans, representing 14.2% of the pool, are currently specially serviced, the largest of which is the previously mentioned Quaker Bridge Mall. Additionally, there are 12 loans, representing 22.3% of the pool, on the servicer’s watchlist. These loans are being monitored for various reasons, including low debt service coverage ratio (DSCR) or occupancy, tenant rollover risk, and/or pandemic-related forbearance requests.

Quaker Bridge Mall transferred to special servicing in November 2020 after the loan fell behind on its debt service payments. The borrower had initially requested a payment deferral at the outset of the pandemic, but was denied as the servicer determined the borrower was not able to demonstrate the need for deferral. The loan ultimately missed its October 2020 payment and has been delinquent ever since. While the post-transfer workout plan seemed headed toward a payment deferral, the servicer is now negotiating potential reinstatement terms.

The loan is secured by the interior portion of a 1.1 million square foot (sf) Simon-operated regional mall in Lawrence Township, New Jersey, that has seen two of its four noncollateral anchor tenants vacate in the last three years. Sears vacated its space in September 2018 and Lord & Taylor vacated in February 2021 after giving notice during the summer of 2020. The YE2020 net cash flow (NCF) was reported at $14.2 million, representing a 3.4% decline from the YE2019 NCF of $14.7 million, and a 2.8% decline from the issuer’s underwritten NCF of $14.6 million. Despite the negative effects from the pandemic, collateral occupancy remains healthy at 92.6% as of December 2020. The largest collateral tenants are Forever 21, Old Navy, and H&M, which collectively occupy 17.6% of the net rentable area. DBRS Morningstar analyzed this loan using a hypothetical liquidation scenario, with an implied loss severity in excess of 20.0%.

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-D, X-E, and X-F 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 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 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.

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 [email protected].

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