DBRS Morningstar Confirms All Classes of Wells Fargo Commercial Mortgage Trust 2015-NXS3

DBRS, Inc. (DBRS Morningstar) confirmed all classes of Commercial Mortgage Pass-Through Certificates, Series 2015-NXS3 issued by Wells Fargo Commercial Mortgage Trust 2015-NXS3 as follows:

-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class PEX at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class X-D at BBB (low) (sf)
-- Class X-E at BB (sf)
-- Class E at BB (low) (sf)
-- Class X-FG at B (high) (sf)
-- Class F at B (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction, which continues to perform in line with issuance expectations. At issuance, the trust comprised 56 loans secured by 59 commercial and multifamily properties with a total trust balance of $814.5 million. Per the January 2022 remittance report, 49 loans secured by 52 properties remain in the trust with a total trust balance of $545.6 million, representing a 33.0% collateral reduction since issuance. The pool is concentrated in loans secured by retail and hospitality properties, representing 38.8% and 20.9% of the trust balance, respectively. Both of these property types were significantly affected by the initial impacts of the Coronavirus Disease (COVID-19) pandemic; however, only one loan secured by a hotel property in the subject trust remained in special servicing as of January 2022. Five loans, representing 7.0% of the trust balance, are fully defeased.

The Yosemite Resorts loan (Prospectus ID#3, 10.8% of the trust balance) is in special servicing and continued to report delinquent payments as of the December 2021 remittance. The subject loan is secured by a portfolio of two hotels including the 327-key Yosemite View Lodge and the 209-key Cedar Lodge, located near Yosemite National Park in El Portal, California. The loan transferred to special servicing in July 2020, with both properties reporting significant performance impacts amid the pandemic. A forbearance agreement was executed in November 2021 that allowed for a deferral of principal and interest (P&I) payments or a conversion of payments to interest only (IO) that were previously due for some months in 2020 and 2021. The servicer’s December 2021 commentary stated $5.3 million in outstanding P&I was repaid with the closing of the modification, with other amounts, including outstanding special servicing fees, to be repaid by the end of 2021. As such, the loan is expected to report current within the near term. The collateral was reappraised in July 2021 for a value of $124.7 million, compared with the August 2020 appraised value of $108.6 million and the appraised value of $122.5 million value at issuance.

Two loans, 11 Madison Avenue (Prospectus ID#6, 6.4% of the trust balance) and The Parking Spot LAX (Prospectus ID#15, 2.3% of the trust balance, were shadow-rated investment grade at issuance. DBRS Morningstar confirmed that the performance of these loans remains consistent with investment-grade loan characteristics.

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-D, X-E, and X-FG 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.

DBRS Morningstar provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loan in the transaction:

-- Prospectus ID#3 – Yosemite Resorts (10.8% 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 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.

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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