DBRS Morningstar Changes Trends on Three Classes, Confirms All Ratings of MSCCG Trust 2015-ALDR

DBRS Limited (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass-Through Certificates, Series 2015-ALDR issued by MSCCG Trust 2015-ALDR as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (sf)
-- Class D at BBB (sf)

DBRS Morningstar changed the trends on Classes B, C, and D to Stable from Negative. All other trends remain Stable. The rating confirmations and Stable trends reflect DBRS Morningstar’s overall improved outlook for the collateral mall given improved sales performance; a new major tenant, Dave & Buster’s; and the sponsor’s recent investments, which suggest a long-term commitment to the property.

The underlying first-mortgage loan, which has a 10-year term and a maturity date in 2025, is secured by the fee simple interest in a 575,700-square-foot (sf) portion of Alderwood Mall, a super-regional mall in Lynnwood, Washington, approximately 18 miles north of Seattle. The mall is anchored by collateral tenant Loews Cineplex Entertainment (Loews), and noncollateral tenants JCPenney, Macy’s, and Nordstrom. The sponsor purchased the noncollateral space formerly occupied by Sears after the tenant vacated in 2017 and that space is part of a $179.0 million expansion and renovation plan that is scheduled to be completed by the end of 2022. The loan is sponsored by a joint venture between Brookfield Property Partners L.P (rated BBB (low) with a Stable trend by DBRS Morningstar) and the New York State Common Retirement Fund (doing business as Homart II LLC).

Whole-loan proceeds of $355.0 million consisted of six separate notes at issuance, with the subject trust holding a total of $225.6 million of the pari passu balance, and the remainder contributed to three multi-borrower conduit transactions, one of which (Morgan Stanley Capital I trust 2015-MS1) is rated by DBRS Morningstar. As of the August 2022 remittance, the subject trust’s balance was $225.6 million, representing an 11.7% collateral reduction from issuance.

As of March 2022, the collateral portion of the property was 88.6% occupied, with an overall occupancy rate of 96.6%, both of which are in line with prior years. The largest collateral tenants include Loews (13.8% of the net rentable area (NRA)), REI (4.4% of the NRA), and Forever 21 (4.2% of the NRA). According to the March 2022 rent roll, tenants representing 18.1% of the NRA are scheduled to expire within the next 12 months, including Forever 21. According to the YE2021 tenant sales report, in-line sales for tenants less than 10,000 sf (excluding Apple) were $602 per sf (psf), increasing 20.4% from $479 at year-end (YE) 2020 and total in-line sales were $520 psf, increasing 22.5% from $403 at YE2020. As of YE2021, the loan reported positive net cash flows and a debt service coverage ratio of 1.34 times, remaining in line with YE2020 but below issuance expectations. Given the sales trends, the recent opening of Dave & Buster’s, and ongoing work to improve the remainder of the former Sears space, DBRS Morningstar expects cash flows will continue to build back toward historical levels.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factor(s) 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/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings.

Class X-A is an interest-only (IO) certificate that references 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 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.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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