DBRS Morningstar Upgrades Four Classes of MSJP 2015-HAUL Mortgage Trust

DBRS Limited (DBRS Morningstar) upgraded four classes of the Commercial Mortgage Pass-Through Certificates issued by MSJP 2015-HAUL Mortgage Trust (the Issuer) as follows:

-- Class B to AAA from AA (high) (sf)
-- Class C to AAA from AA (sf)
-- Class D to AA (low) from A (sf)
-- Class E to BBB (high) from BBB (low) (sf)

DBRS Morningstar also confirmed the following classes:

-- Class A at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)

All trends are Stable.

The rating upgrades reflect the significant performance improvements of the underlying collateral since the last rating action, driven by ongoing demand for self-storage, and the amortization of the whole loan.

The subject transaction consists of a $170.0 million trust loan secured by the fee-simple interest in a multistate portfolio of 105 self-storage properties totaling 32,519 units and 2.7 million rentable square feet. Each property is owned and operated under the U-Haul brand, ranging in size from 89 units to 958 units. The properties are situated across 35 states and were originally constructed between 1902 and 2003.

As of the April 2023 remittance, the whole loan balance has amortized to $199.2 million from $270 million at issuance. The whole loan comprises six separate notes: A-1A, A-1B, A-2A, A-2B, A-3A, and A-3B. The A-1A and A-1B notes are companion loans and were contributed to the JPMBB 2015-C32 and MSBAM 2015-C27 transactions, both of which are rated by DBRS Morningstar. The whole loan is fully amortizing on a 20-year schedule, wherein the nontrust companion notes will receive payments first and fully amortize over the first 10 years of the loan term, followed by payments to the trust notes, which are scheduled to fully amortize by the scheduled September 2035 maturity date. As of the April 2023 remittance, the trust notes have not yet begun to amortize. The loan is sponsored by AMERCO, the parent company of U-Haul.

Portfolio occupancy increased to 94.3%, a modest increase from 93.4% at YE2021 and 92.6% at issuance. The top three state concentrations by allocated loan amount are New York (14%, seven properties), Texas (12%, nine properties) and Pennsylvania (8%, seven properties). The portfolio benefits from the granular distribution of properties throughout the United States, strategically located in high traffic areas.

The YE2022 consolidated net cash flow (NCF) was reported at $54.3 million (representing a debt service coverage ratio (DSCR) of 2.61 times(x)), an increase of 6.7% from the YE2021 figure of $50.9 million (a DSCR of 2.41x) and an increase of 85.9% from the DBRS Morningstar NCF of $29.2 million (a DSCR of 1.38x) last derived in 2020. The increased net cash flow is largely driven by increases in truck income and miscellaneous income, which were not considered in DBRS Morningstar’s analysis at issuance. For purposes of this review, DBRS Morningstar derived a NCF of $30.3 million (a DSCR of approximately 1.44x), based on real estate operations for the YE2022 and reflective of sustained increases in occupancy and rental income over the past several years.

Given the continued increases in performance, DBRS Morningstar has updated the loan-to-value (LTV) sizing in its analysis and applied an 8.5% cap rate to the DBRS Morningstar NCF of $30.3 million, resulting in a DBRS Morningstar value of $356.6 million, an increase of 23.9% from the previous DBRS Morningstar value of $287.8 million, derived in June 2021. The updated value implies an LTV ratio of 55.9%, compared with the April 2022 LTV figure of 76.1% and the issuance figure of 72.9%. Based on these factors, in addition to the continued deleveraging of the companion notes and expected amortization of the trust in the near to moderate term, DBRS Morningstar finds the upgrades to be well supported.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance 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 (May 17, 2022) at https://www.dbrsmorningstar.com/research/396929.

Classes X-A and X-B 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 North American CMBS Surveillance Methodology (March 16, 2023) https://www.dbrsmorningstar.com/research/410912.

Other methodologies referenced in this transaction are listed at the end of this press release.

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 rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the rating process for this rating action.

DBRS Morningstar had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

This is a solicited credit rating.

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].

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577

Rating North American CMBS Interest-Only Certificates (December 19, 2022; https://www.dbrsmorningstar.com/research/407577)

North American Single-Asset/Single-Borrower Ratings Methodology (February 23, 2023; https://www.dbrsmorningstar.com/research/410191)

DBRS Morningstar North American Commercial Real Estate Property Analysis Criteria (September 12, 2022; https://www.dbrsmorningstar.com/research/402646)

North American Commercial Mortgage Servicer Rankings (September 8, 2022; https://www.dbrsmorningstar.com/research/402499)

Interest Rate Stresses for U.S. Structured Finance Transactions (August 30, 2022; https://www.dbrsmorningstar.com/research/402153)

Legal Criteria for U.S. Structured Finance (December 7, 2022; https://www.dbrsmorningstar.com/research/407008)

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