DBRS Morningstar Confirms Ratings on All Classes of JPMBB Commercial Mortgage Securities Trust 2015-C33

DBRS Limited (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass-Through Certificates, Series 2015-C33 issued by JPMBB Commercial Mortgage Securities Trust 2015-C33 as follows:

-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-S at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AA (high) (sf)
-- Class B at AA (sf)
-- Class X-C at A (high) (sf)
-- Class C at A (sf)
-- Class D-1 at BBB (high) (sf)
-- Class X-D at BBB (sf)
-- Class D at BBB (low) (sf)
-- Class D-2 at BBB (low) (sf)
-- Class E at BB (sf)
-- Class F at BB (low) (sf)
-- Class G at B (low) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of this transaction, which has remained in line with DBRS Morningstar’s expectations since the last rating action. As of the May 2023 remittance, 58 of the original 64 loans remain in the trust, with an aggregate balance of $610.6 million, representing a collateral reduction of 19.8% since issuance. Thirteen loans, representing 19.8% of the pool, are fully defeased. Five loans, representing 27.9% of the pool, are on the servicer’s watchlist, including one loan that is delinquent. Fort Wayne Retail Portfolio (Prospectus ID#25; 1.4% of the pool balance), secured by a portfolio of five retail properties across Indiana, has not provided recent financial reporting in addition to being past due for the April and May 2023 debt service payments. The YE2021 consolidated occupancy rate was 100.0% with a debt service coverage ratio (DSCR) of 1.47 times (x), compared with the YE2020 occupancy rate of 96.5% and DSCR of 1.17x.

The largest loan in the pool is also on the servicer’s watchlist. 32 Avenue of the Americas (Prospectus ID #1; 20.4% of the pool balance) is secured by a 1.2 million square feet (sf) dual office and data center property in the Tribeca District of Manhattan. The 10-year interest-only (IO) loan is scheduled to mature in November 2025 and is one of five pari passu pieces of a $425.0 million whole loan. The loan was added to the servicer’s watchlist in April 2023 because of occupancy concerns. The property was 61.8% occupied as per the February 2023 rent roll, compared with 70.0% at YE2022, 75.6% at YE2021, and 95.0% at issuance. The most recent tenant departure was AMFM Operating Inc., part of iHeartMedia, which occupied 8.1% of the net rentable area (NRA) before vacating at lease expiry in December 2022.

The largest tenants at the subject property include Telx, LLC (12.4% of the NRA, lease expiry in July 2033), Dentsu Holdings USA Inc. (5.9% of the NRA, lease expiry in August 2025), and CenturyLink Communications, LLC (5.8% of the NRA, lease expiry in August 2040). Near-term rollover risk is minimal, with leases representing only 1.0% of the NRA scheduled to expire over the next 12 months. Approximately 3.0% of sublease space is listed as available on Optimal Space as two current tenants that had previously expanded have since condensed their footprints at the property. The YE2022 DSCR was reported to be 1.78x, down from 1.96x at YE2021, and 2.01x at YE2020. The loan is equipped with a cash management account that will be activated at a DSCR trigger of 1.15x for two consecutive quarters.

The sponsor, Rudin Management (Rudin), acquired the subject property in 1999 and has reportedly spent $10.0 million on upgrading the building interiors, exteriors, and systems, indicative of strong sponsor commitment to the property. Rudin is currently advertising 38.8% of the vacant space as available for leasing at the average rental rate of $73.40 per sf (psf), which is higher than the current average in-place rental rate of $63.70 psf. As per Reis, office properties in the South Broadway submarket reported a Q1 2023 vacancy rate of 11.5% with an average asking rent of $70.31, compared with the Q1 2022 vacancy rate of 7.7% and an average asking rent of $68.70 psf. Given the unfavorable conditions of the current office property market, with several companies downsizing and year-over-year declines in occupancy since the onset of the of the Coronavirus Disease (COVID-19) pandemic, DBRS Morningstar expects the stabilization period for the property could take longer than anticipated. In its analysis, DBRS Morningstar applied loan-to-value stress and an elevated probability of default adjustment to increase the expected loss for this loan, given these concerns.

ENVIRONMENTAL, SOCIAL, AND 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, X-B, X-C, 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.

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.

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

The rating methodologies used in the analysis of this transaction can be found at: https://www.dbrsmorningstar.com/about/methodologies.

North American CMBS Multi-Borrower Rating Methodology/North American CMBS Insight Model v 1.1.0.0 (March 16, 2023), https://www.dbrsmorningstar.com/research/410913

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

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].