DBRS Morningstar Confirms All Classes of Benchmark 2018-B6 Mortgage Trust

DBRS, Inc. (DBRS Morningstar) confirmed all classes of Commercial Mortgage Pass-Through Certificates, Series 2018-B6 issued by Benchmark 2018-B6 Mortgage Trust (the Issuer) as follows:

-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-AB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (sf)
-- Class D at BBB (high) (sf)
-- Class X-D at BBB (sf)
-- Class E at BBB (low) (sf)
-- Class F-RR at BB (high) (sf)
-- Class G-RR at BB (sf)
-- Class J-RR at B (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction, which remains in line with expectations at issuance. The transaction closed with 55 fixed-rate loans secured by 211 commercial and multifamily properties with a trust balance of $1.1 billion. Per the October 2021 remittance report, 54 loans remain in the pool with the pool balance minimally reduced to approximately $1.0 billion. Six loans, totaling 34.1% of the trust balance, were shadow-rated investment grade by DBRS Morningstar at issuance. With this review, DBRS Morningstar confirmed that all six continue to exhibit investment-grade characteristics. The transaction has had relatively limited exposure to the property types most immediately affected by the Coronavirus Disease (COVID-19) pandemic as only eight loans, representing approximately 10.0% of the deal balance, are secured by hospitality properties. The transaction also benefits from relatively low leverage with a weighted-average (WA) loan-to-value (LTV) ratio of 56.0% for the underlying loans, based on the appraised values at issuance.

Per the October 2021 remittance report, four loans, representing 5.7% of the trust balance, are in special servicing, all of which are secured by hotel properties. The special servicer is pursuing loan modifications for all four loans with no plans to foreclose. The largest of these loans is the Aloft Portland Airport loan (Prospectus ID#13; 2.2% of the trust balance), which is secured by the leasehold interest in a five-story 136-key limited-service hotel near the Portland International Airport. The loan transferred to the special servicer in September 2020 for payment default and loan payments were last remitted in July 2020. Per the special servicer, a loan modification is being documented, which will require all ground lease payments to be brought current. The property was re-appraised in March 2021 for $30.3 million, down 24.1% from the $39.9 million appraised value at issuance. The total loan exposure with the outstanding principal balance and servicer advances equates to an 85.6% LTV ratio based on the most recent appraised value. A June 2021 STR report noted the collateral’s occupancy rate, average daily rate (ADR) and revenue per available room (RevPAR) of 84.2%, $117, and $98, respectively, for the trailing three months ended June 30, 2021, were considerably greater than the competitive set’s occupancy rate, ADR, and RevPAR figures of 59.9%, $116 and $67, respectively, but continued to lag historical performance metrics.

The second-largest loan in special servicing, JAGR Hotel Portfolio (Prospectus ID#18; 1.8% of the trust balance), is secured by a portfolio of three full-service hotels totaling 721 keys in Annapolis, Maryland; Grand Rapids, Michigan; and Jackson, Mississippi. The loan transferred to the special servicer in August 2020 because of imminent monetary default caused by the coronavirus pandemic. Loan payments were last remitted in October 2020 and the special servicer expects a loan modification to be finalized by December 2021. The properties were re-appraised in Q3 2021 for a combined value of $52.3 million, down from the $73.5 million appraised value at issuance. The total loan exposure with the outstanding principal balance and servicer advances equate to an LTV ratio of 98.5%, based on the most recent appraised value.

As of October 2021, four loans, representing 9.4% of the trust balance, are on the servicer’s watchlist for a low debt service coverage ratio (DSCR). The largest watchlisted loan, Willow Creek Corporate Center (Prospectus ID#4; 6.7% of the trust balance), will be removed from the servicer’s watchlist in the near term as the DSCR calculated for 2020 was artificially low because of an error in the servicer’s other income adjustments. The most recent developments for this loan are positive, including a new lease for Facebook Technologies, LLC (Facebook). Facebook, an investment-grade entity, executed a 10-year lease for 40.0% of the building’s rentable space that commenced in October 2020. The new tenant replaced GE Grid Solutions, which vacated before its May 2022 lease expiration. A March 2021 rent roll showed the property is 100% occupied and Facebook’s rental rate is above the rate paid by the previous tenant.

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.

DBRS Morningstar did not perform an updated model run as performance was deemed to be generally in line with expectations at the last review. As of the previous actions published on December 18, 2020, a material deviation from the North American CMBS Insight Model was reported on Class B as the quantitative results suggested a lower rating. The material deviation is warranted given the uncertain loan level event risk.

Classes X-A and X-D 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 updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Prospectus ID#4 – Willow Creek Corporate Center (6.7% of the pool)
-- Prospectus ID#13 – Aloft Portland Airport (2.2% of the pool)
-- Prospectus ID#18 – JAGR Hotel Portfolio (1.8% of the pool)

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 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.

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.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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