DBRS Morningstar Confirms Ratings on JPMBB Commercial Mortgage Securities Trust 2015-C29

DBRS, Inc. (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass-Through Certificates, Series 2015-C29 issued by JPMBB Commercial Mortgage Securities Trust 2015-C29 as follows:

-- Class A-3A1 at AAA (sf)
-- Class A-3A2 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 X-B at AA (sf)
-- Class B at AA (low) (sf)
-- Class X-C at A (sf)
-- Class C at A (low) (sf)
-- Class EC at A (low) (sf)
-- Class D at CCC (sf)
-- Class E at C (sf)
-- Class F at C (sf)

All trends are Stable, with the exception of Classes D, E, and F, which have ratings that do not typically carry trends in commercial mortgage-backed securities (CMBS) ratings.

DBRS Morningstar’s expectations for the pool remain in line with the last rating action in November 2022. There have been minimal changes since that time with one small loan having been repaid and another small loan defeased. The CCC (sf) and C (sf) ratings reflect DBRS Morningstar’s continued concern about three loans in special servicing, which represent 14.6% of the trust balance including the largest loan in the pool, One City Centre (Prospectus ID#2; 10.6% of the pool), that are expected to liquidate from the trust with significant losses.

The One City Centre loan is secured by the borrower’s fee interest in a 602,122 square foot (sf) office property in Houston’s central business district (CBD) and is part of a whole loan that was split pari passu between two CMBS transactions, both of which are rated by DBRS Morningstar. The loan transferred to special servicing in April 2021 because of imminent default related to the borrower’s unwillingness to fund operating shortfalls after the former largest tenant, Waste Management, which comprised 40.5% of net rentable area (NRA) and 50.2% of total rent at issuance, vacated upon its lease expiration in December 2020. As of the most recent servicer reporting in June 2022, the occupancy rate remains unchanged at 25.0% from YE2021, a significant decline from 68.0% at YE2020 and 82.6% at issuance. Similarly, the debt service coverage ratio (DSCR) as of June 2022 declined to -1.30 times (x) from -0.80x at YE2021, 1.78x at YE2020, and 2.04x at issuance. Given the lack of resolution of the specially serviced loan, declining performance metrics, dismal leasing traction, and soft Houston office market fundamentals, DBRMS Morningstar assumed a liquidation scenario for the subject loan, resulting in an overall loss severity of nearly 85%.

As of the February 2023 remittance, 48 of the original 63 loans remain in the trust with an outstanding trust balance of $568.1 million, reflecting a collateral reduction of 42.3% since issuance because of loan repayments, scheduled amortization, and $4.6 million of realized losses that have been contained to the nonrated Class NR. Eleven loans, representing 19.4% of the trust balance, are defeased. Seven loans, representing 24.1% of the trust balance, are on the servicer’s watchlist, including the second-largest loan in the pool, 2025 M Street (Prospectus ID #1; 10.2% of the pool).

DBRS Morningstar has concerns about the 2025 M Street loan, which is secured by the borrower’s fee interest in a 191,281-sf office property in the Washington D.C. CBD. The property’s occupancy rate has remained below stabilization at 62.8% since the former second-largest tenant, SmithBucklin Corp, which occupied 37.3% of NRA and comprised 52.3% of base rent at issuance, vacated at its lease expiration in June 2020. The servicer reported the DSCR has increased slightly to 0.54x as of September 2022 from 0.49x as of YE2021. As of the February 2023 remittance, reserves total $5.9 million, which includes $2.2 million in the tenant reserve account and $3.5 million in the other reserve account. The loan remains current with the borrower continuing to fund interest shortfalls. Marketing material for the available space notes property renovations are coming soon, which further demonstrates the borrower’s commitment to the property. However, given the overall concerns related to the Washington office market and uncertainty around the future of the return-to-work policies for government employees, a prolonged lease-up period, and a DSCR below breakeven , the loan was analyzed with a stressed scenario.

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 (May 17, 2022).

Classes X-A, X-B, and X-C are interest-only (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.

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

The principal methodology is the North American CMBS Surveillance Methodology, (March 16, 2023) 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. 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 info@dbrsmorningstar.com.

DBRS, Inc.
22 West Washington Street
Chicago, IL 60602 USA
Tel. +1 312 332-3429