Morningstar DBRS Confirms Credit Ratings on All Classes of CSAIL 2017-CX10 Commercial Mortgage Trust

DBRS, Inc. (Morningstar DBRS) confirmed its credit ratings on the Commercial Mortgage Pass-Through Certificates, Series 2017-CX10 issued by CSAIL 2017-CX10 Commercial Mortgage Trust as follows:

-- Class STN-A at AA (low) (sf)
-- Class STN-X at A (sf)
-- Class STN-B at A (low) (sf)
-- Class V1-STNA at A (low) (sf)
-- Class STN-C at BBB (low) (sf)
-- Class V1-STNC at BBB (low) (sf)
-- Class V2-STN at BBB (low) (sf)

All trends are Stable.

The credit rating confirmations reflect the healthy performance of the underlying collateral as exhibited by the YE2023 occupancy and debt service coverage ratio (DSCR) of 86% and 1.93 times (x), respectively, with revenue per available room (RevPAR) reaching near peak levels since issuance. Despite the generally healthy performance metrics, the collateral's net cash flow (NCF) has historically been volatile with a dip in the YE2023 figure compared to the prior year. As such, Morningstar DBRS applied a stressed NCF scenario to the analysis for this review, as further detailed below.

Morningstar DBRS rates the rake bond that is tied to the Standard High Line NYC Loan-Specific Certificates, backed by the Standard High Line NYC loan. The interest-only, fixed-rate loan is secured by the borrower's fee-simple interest in The Standard, High Line hotel, a high-end, 338-key boutique hotel in the Meatpacking District of Manhattan. The whole loan of $170.0 million consists of $45.0 million of senior debt that backs the pooled certificates, and $125.0 million of junior debt, of which $58.4 million backs the Standard High Line NYC Loan-Specific Certificates.

According to the STR, Inc. report for the trailing 12-month (T-12) period ended March 31, 2024, the property reported an occupancy rate, average daily rate, and RevPAR of 87.3%, $435, and $380, respectively, with RevPAR relatively unchanged from the prior year but generally high since issuance. Despite the strong RevPAR performance, the subject's NCF has historically been volatile, mainly driven by fluctuations in food and beverage revenues and increasing expenses. The YE2023 NCF was $15.8 million, compared to the YE2022 NCF of $22.5 million and YE2021 NCF of $5.9 million. Because of volatility in NCF, Morningstar DBRS stressed the YE2023 NCF in its analysis, while maintaining a cap rate of 7.5%, which results in a Morningstar DBRS value of $168.1 million. The implied Morningstar DBRS LTV for the stressed scenario is 61.5% for the trust and 101.1% for the whole loan balance. Morningstar DBRS maintained positive qualitative adjustments totaling 3.0% to account for the property's revered and award-winning quality as well as the premier location on Manhattan's far west side with unobstructed views of the Hudson River and the Manhattan skyline.

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 Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://dbrs.morningstar.com/research/427030 (January 23, 2024).

Class STN-X 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 credit ratings are subject to surveillance, which could result in credit ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by Morningstar DBRS.

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

The principal methodology is North American CMBS Surveillance Methodology (March 1, 2024; https://dbrs.morningstar.com/research/428798).

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

The credit rating was initiated at the request of the rated entity.

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

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

This is a solicited credit rating.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

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

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

-- North American Single-Asset/Single-Borrower Ratings Methodology (March 1, 2024; https://dbrs.morningstar.com/research/428799)
-- Rating North American CMBS Interest-Only Certificates (June 28, 2024; https://dbrs.morningstar.com/research/435294)
-- Interest Rate Stresses for U.S. Structured Finance Transactions (February 26, 2024; https://dbrs.morningstar.com/research/428623)
-- DBRS Morningstar North American Commercial Real Estate Property Analysis Criteria (September 22, 2023; https://dbrs.morningstar.com/research/420982)
-- North American Commercial Mortgage Servicer Rankings (August 23, 2023; https://dbrs.morningstar.com/research/419592)
-- Legal Criteria for U.S. Structured Finance (April 15, 2024; https://dbrs.morningstar.com/research/431205)

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