DBRS Morningstar Confirms All Ratings on Wells Fargo Commercial Mortgage Trust 2015-C28

DBRS Limited (DBRS Morningstar) confirmed its ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2015-C28 issued by Wells Fargo Commercial Mortgage Trust 2015-C28 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-E at B (high) (sf)
-- Class E at B (sf)
-- Class F at CCC (sf)

The trend on Class D was changed to Stable from Negative and Class E continues to carry a Negative trend. All other trends are Stable, with the exception of Class F, which carries a rating with no trends.

The Negative trends on Classes E and X-E are reflective of the concerns regarding a loan in the top 15, 3 Beaver Valley Road (Prospectus ID#6; 4.3% of the pool) as well as the loans in special servicing, which are discussed in greater detail below. The rating confirmations reflect the overall stable performance of the pool since issuance. Since the last review, the Courtyard Marriott Harrisburg loan was liquidated from the trust in December 2021 via a Note Sale, which resulted in a loss of $2.2 million, a better-than-expected outcome considering no updated value was available at the last review. As of the January 2022 remittance, 85 of the original 99 loans remain in the pool, representing a collateral reduction of 14.9% since issuance. The pool benefits from three defeased loans, representing 2.3% of the pool. Seventeen loans are on the servicer’s watchlist and three loans are in special servicing, representing 19.4% and 2.5% of the pool balance, respectively.

The 3 Beaver Valley Road loan is secured by a suburban office property in Wilmington, Delaware, which has been on the DBRS Morningstar Hotlist since March 2020 following the early termination of the former second-largest tenant, Solenis LLC (Solenis), which previously occupied 14.8% of the net rentable area (NRA). In addition, the remaining tenant at the subject, Farmers Insurance Exchange (Farmers) (80.1% of NRA), exercised its option to reduce its space by approximately 53,000 square feet (sf; 20% of NRA), which occurred in January 2022. Farmers paid a $1.4 million fee in May 2021 to reduce its footprint at the property. Based on an online posting, approximately 223,000 sf (85.0% of NRA) was listed as available for lease, which suggests that Farmers may continue to downsize or vacate the subject. The loan has $8.0 million of funds currently held across all reserves, including $576,408 held in tenant reserves and $7.1 million held in other reserves, which likely includes the lease termination fee paid by Farmers. The property is well located with excellent frontage on Beaver Valley Road but the softening of the submarket was present prior to the pandemic. DBRS Morningstar will continue to monitor this loan and additional details on the loan can be found on the DBRS Viewpoint platform.

The largest specially serviced loan, Washington Square (Prospectus ID#22; 1.3% of the pool), is secured by a student housing property whose performance had been declining prior to the pandemic as a result of a drop in enrollment at Schenectady County Community College. The loan failed to repay at its February 2020 maturity but a loan modification was executed to extend the maturity to April 2023 after an equity contribution was made by the borrower to bring the loan current, pay lender expenses, and fund a newly formed operational shortfall reserve. The terms of the loan modification include a conversion to interest-only (IO) payments for the remaining term and, upon loan maturity, a minimum of $9.6 million payment must be made by the borrower to repay the loan, which is below the current outstanding loan balance of $12.7 million but slightly above the December 2020 appraisal value of $9.4 million. Additional details on the loan can be found on the DBRS Viewpoint platform.

ESG CONSIDERATIONS
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-E 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 loans in the transaction:

-- Prospectus ID#6 – 3 Beaver Valley Road (4.3% of the pool)
-- Prospectus ID#22 – Washington Square (1.3% 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 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 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].

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