DBRS Morningstar Confirms All Ratings on Natixis Commercial Mortgage Securities Trust 2018-ALXA

DBRS, Inc. (DBRS Morningstar) confirmed the following ratings on the Commercial Mortgage Pass Through Certificates, Series 2018-ALXA issued by Natixis Commercial Mortgage Securities Trust 2018-ALXA:

-- Class A at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (high) (sf)
-- Class D at BBB (high) (sf)
-- Class E at BB (high) (sf)

All trends are Stable. The rating confirmations reflect the overall stable performance of this transaction, which is in line with DBRS Morningstar’s expectations.

The loan is secured by Centre 425 Bellevue, a 356,909 square foot (sf), Class A, LEED Silver-certified office building in downtown Bellevue, Washington, approximately 10 miles east of Seattle. The condominium interest includes 98.3% of the leasable square footage within the 16-story structure in addition to an eight-level underground parking garage. The property is in close proximity to the Bellevue Transit Center, which is undergoing an extension that is expected to be completed in 2023. The property is predominantly occupied by the investment-grade tenant Amazon.com, Inc. (Amazon) under a 16-year triple net lease that extends to December 31, 2032.

The loan is sponsored by RFR Holdings LLC and Tristar Capital, whose principals serve as guarantors for the transaction. The $124.5 million trust loan is part of a split loan structure that consists of four notes totaling $208.5 million, with the A-1 and B notes being the assets of the subject trust. A part of the pari passu piece (21.1%; representing 5.3% of the pool) is held in CSAIL 2017-CX10, whose ratings DBRS Morningstar reviewed and confirmed in September 2021. Additional debt consists of a $57.6 million mezzanine loan, which is coterminous with the trust mortgage loan. The fixed-rate interest-only (IO) mortgage loan has an anticipated repayment date in 2027 and final loan maturity in 2033.

According to the December 2021 rent roll, the property is 98.2% occupied by Amazon, which is paying base rent of $38.45/sf, subject to annual rent escalations of 2.25%. Per the lease agreement, Amazon has three five-year extension options and no termination options. While it can downsize its space by whole-floor increments, Amazon must maintain at least 175,000 sf at the collateral. Its lease is also guaranteed by Amazon, subject to a cap of $190.0 million for the first five years, which reduces by $19.0 million each year thereafter. As of YE2021, the servicer reported a net cash flow (NCF) of $16.0 million with a debt service coverage ratio (DSCR) of 1.78 times (x), an increase from the YE2020 NCF of $15.5 million with a DSCR of 1.72x, and the issuer’s NCF of $15.2 million with a DSCR of 1.69x.

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.

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 this transaction.

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.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is the North American CMBS Surveillance Methodology (March 4, 2022), 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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