DBRS Morningstar Confirms All Ratings on BANK 2017-BNK5

DBRS Limited (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass Through Certificates, Series 2017-BNK5 issued by BANK 2017-BNK5 as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- 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 B at AA (high) (sf)
-- Class X-B at AA (sf)
-- Class C at AA (low) (sf)
-- Class X-D at A (low) (sf)
-- Class D at BBB (high) (sf)
-- Class E at BB (high) (sf)
-- Class F at BB (low) (sf)
-- Class G at B (low) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance, when the transaction consisted of 87 fixed-rate loans secured by 211 commercial and multifamily properties, with a trust balance of $1.23 billion. According to the November 2021 remittance report, one loan has paid in full, leaving 86 loans within the transaction. There has been nominal collateral reduction and defeasance since issuance.

The transaction is concentrated by property type as 21 loans, representing 39.3% of the current trust balance, are secured by retail assets, whereas seven loans and 18.8% of the current trust balance are secured by office assets. Six loans are backed by lodging assets which comprise 14.2% of the current pool balance. According to the November 2021 remittance, there are no specially serviced or delinquent loans within the transaction.

There are 27 loans on the servicer’s watchlist, representing 23.3% of the current trust balance. There are 12 loans on the watchlist (2.4% of the pool) that are secured by co-op properties, and are generally exhibiting stable risk profiles from issuance. The remaining watchlisted loans have generally been affected by the pandemic and, where merited, probability of default penalties were applied to increase the expected loss in the analysis for this review.

At issuance, four loans, representing 18.6% of the current pool balance, were shadow-rated investment grade. These loans include Del Amo Fashion Center (Prospectus ID #1; 7.5% of the pool); Olympic Tower (Prospectus ID #5; 4.7% of the pool); Gateway Net Lease Portfolio (Prospectus ID #9; 3.8% of the pool); and Stor-It Southern California Portfolio (Prospectus ID #11; 2.8% of the pool). With this review, DBRS Morningstar confirms that the performance of these loans remains consistent with investment-grade loan characteristics.

The largest loan on the servicer’s watchlist, Starwood Capital Group Hotel Portfolio (Prospectus ID#2; 6.1% of the pool) is secured by a portfolio of 65 hotels totaling 6,366 keys spread across 21 states. 59% of the rooms are limited service, 35% are extended stay, and the remaining 6% are full service. The portfolio is granular with no property representing more than 2.6% of the allocated loan balance. The loan was added to the servicer’s watchlist in July 2020, when the servicer was processing the borrower’s request for Coronavirus Disease (COVID-19) relief. A forbearance was granted in the form of deferment of non-tax, non-insurance, and non-ground rent reserves for a period of three months to allow for those amounts to be applied to the monthly debt service obligations. Repayment of the deferred amounts was to begin over a 12-month period beginning in February 2021. The loan has remained current since the modification request was granted. As expected during the pandemic, cash flows were quite low at year-end 2020, but the most recent reporting shows a trailing six months ended June 2021 debt service coverage ratio of 1.26 times, suggesting demand has picked up substantially since last year.

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 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#2 – Starwood Capital Group Hotel Portfolio (6.1% of the pool)
-- Prospectus ID#12 – Richmond Marriott Short Pump (1.9% 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 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 DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482/baseline-macroeconomic-scenarios-application-to-credit-ratings.

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.

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. + 416 593-5577