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

DBRS Limited (DBRS Morningstar) confirmed its ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2018-B6 issued by Benchmark 2018-B6 Mortgage Trust 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. As of the August 2022 remittance, 54 of the original 55 loans remain in the pool, with an aggregate principal balance of approximately $1.08 billion, representing a collateral reduction of 5.5% since issuance as a result of loan repayment and scheduled loan amortization. Three loans are in special servicing and eight loans are on the servicer’s watchlist, representing 3.8% and 7.6% of the pool balance, respectively. The loans on the watchlist are being monitored primarily for declines in net cash flows (NCFs), occupancy concerns, and/or deferred maintenance items. Many of these loans were affected by the initial phases of the Coronavirus Disease (COVID-19) pandemic, but are beginning to show signs of recovery as discussed below.

The largest specially serviced loan, Aloft Portland Airport (Prospectus ID#13; 2.2% of the pool), is secured by a 136-key limited-service hotel near the Portland International Airport in Oregon. The loan initially transferred to the special servicer in September 2020 for payment default. The loan was granted short-term forbearance during 2021 and is current as of the August 2022 reporting. The borrower will continue to repay deferred principal and interest payments through December 2022, however, a loan reinstatement was completed in May 2022 and the loan is expected to return to the master servicer with the September 2022 remittance.

According to the April 2022 appraisal, the property was valued at $32.0 million, an increase over the March 2021 appraised value of $30.3 million, but down 19.8% from the issuance value of $39.9 million. According to the May 2022 STR report, for the trailing 12 months (T-12) ended May 31, 2022, the property reported occupancy rate, average daily revenue (ADR), and revenue per available room (RevPAR) of 87.0%, $133, and $116, respectively, reflecting a RevPAR penetration rate of 132.7%. While its performance appears to be trending in the right direction, the property continues to lag pre-pandemic levels.

The largest loan on the servicer's watchlist is the JAGR Hotel Portfolio (Prospectus ID #18; 1.8% of the pool), which is secured by a portfolio of three full-service hotels, totalling 721 keys, in Annapolis, Maryland; Grand Rapids, Michigan; and Jackson, Mississippi. The loan was previously in special servicing because of challenges arising from the pandemic, but was returned to the master servicer in November 2021 following a loan modification, which included the conversion of loan payments to interest-only (IO) payments from June 2021 through October 2022 and deferred principal payments to be repaid over 12 months beginning in November 2022. The loan is currently on the watchlist for a low debt service coverage ratio (DSCR), which was reported at 0.1 times (x) per the T-12 ended June 30, 2022.

According to the June 2022 STR report, for the T-12 ended June 30, 2022, the portfolio reported occupancy rate, ADR, and RevPAR of 54.3%, $117, and $64, respectively, representing a RevPAR penetration of 92.2%. The DoubleTree Annapolis property is outperforming its competitive set with a RevPAR penetration of 115.9%, whereas the DoubleTree Grand Rapids and the Hilton Jackson are both underperforming compared to their competitive set with RevPAR penetration rates of 82.5% and 83.7%, respectively. While its performance has continued to improve year over year from YE2020 to YE2021, with DSCR increasing from -0.76x to -0.23x, the portfolio is still performing well below pre-pandemic levels as the loan reported a YE2019 DSCR of 2.12x. The most recent appraisal, dated July 2021, reported an aggregate value of $52.3 million for the portfolio, down from $73.5 million at issuance, reflecting a 28.8% decline. The lag in improvement at the subject properties suggests stabilization could take longer than DBRS Morningstar anticipated.

DBRS Morningstar shadow-rated six loans, collectively representing 34.2% of the pool balance, as investment grade at issuance. These loans include the Aventura Mall (Prospectus ID#1), Moffett Towers II (Prospectus ID#2), West Coast Albertsons Portfolio (Prospectus ID#5), 636 11th Avenue (Prospectus ID#6), Workspace (Prospectus ID#8), and TriBeCa House Conduit (Prospectus ID#11). With this review, DBRS Morningstar confirmed that the performance of these loans remains consistent with investment-grade loan characteristics.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance (ESG) factors that had a significant or relevant effect on the credit analysis.

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/396929.

Classes X-A and X-D 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 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 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.

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. +1 416 593-5577