Morningstar DBRS Maintains Under Review With Negative Implications Status on All Credit Ratings of Worldwide Plaza Trust 2017-WWP

DBRS Limited (Morningstar DBRS) maintained the Under Review with Negative Implications status on all credit ratings of the following classes of Commercial Mortgage Pass-Through Certificates, Series 2017-WWP issued by Worldwide Plaza Trust 2017-WWP:

-- Class A at BBB (low) (sf)
-- Class X-A at BBB (sf)
-- Class B at BB (low) (sf)
-- Class C at B (low) (sf)
-- Class D at CCC (sf)
-- Class E at CCC (sf)
-- Class F at CCC (sf)

There are no trends for these credit rating actions.

The underlying loan for this transaction is secured by a Class A office property in Manhattan. At the previous credit rating action in May 2025, Morningstar DBRS placed all rated classes Under Review With Negative Implications (URN) because of developments related to the largest tenant, Nomura Holding America, Inc. (Nomura; 34.3% of the net rentable area (NRA), lease expiry in September 2033). At the time, Morningstar DBRS noted that Nomura could be looking to relocate, which would result in the collateral property being nearly fully vacant ahead of the 2027 loan maturity, an obvious concern for refinance prospects. Morningstar DBRS has not received a concrete update on Nomura's plans since the May 2025 credit rating action; however, the servicer has noted that the borrower has begun negotiations with the special servicer for a potential restructuring of the loan to allow new capital to be injected to aid in leasing efforts. Based on the lack of concrete developments and continued uncertainty regarding Nomura's plans, Morningstar DBRS has maintained the URN status with this credit rating action.

As part of a July 2024 rating action, Morningstar DBRS downgraded its credit ratings across the capital stack to reflect increased risks for the loan because of the then-upcoming departure of the then-second-largest tenant at the property, Cravath, Swaine & Moore LLP (Cravath; 30.1% of the NRA), which departed at lease expiration in August 2024. The loan subsequently fell delinquent and was transferred to the special servicer in September 2024. For further information on that credit rating action, please see the press release dated July 24, 2024, on the Morningstar DBRS website. Following the transfer to special servicing, the loan received a modification in January 2025 that allowed all reserve funds to be used to fund operating shortfalls through the earlier date of (1) Nomura providing notice of its lease termination or (2) July 1, 2025. On March 26, 2025, Bloomberg released an article noting that Nomura had been in talks for space at the Penn 2 tower, which is also owned by the subject loan sponsor. As of the July 2025 remittance report, the loan was reported current for the last two payment dates, and remains in special servicing with the special servicer reporting ongoing negotiations surrounding a loan modification proposal, as noted above.

Whole-loan proceeds of $940.0 million and $260.0 million of mezzanine debt facilitated the recapitalization financing of the collateral. The whole loan consists of $616.3 million of senior debt and $323.7 million of junior debt, of which the entirety of the junior debt and $381.3 million of the senior debt is held in the trust. The fixed-rate loan is interest only (IO) through its 10-year term and is sponsored by a joint venture between SL Green Realty Corporation and RXR Realty LLC. The property totals 2.0 million square feet (sf) and occupies an entire block between 49th Street and 50th Street at 825 Eighth Avenue in New York City's Midtown West submarket. The property also includes 10,592 sf of ground-level retail space, and the C and E subway lines are accessible via a station beneath the building.

According to the March 2025 rent rolls, the subject reported a March 2025 occupancy rate of 62.8% compared with the YE2023 rate of 91.4%; occupancy has fallen following the departure of Cravath. The remaining tenancy outside of Nomura is quite granular. According to the property's website, approximately 38.0% of the NRA is listed as available for lease. At issuance, Nomura occupied 819,906 sf (40.0% of NRA) but exercised a termination option for part of its space in January 2022. The tenant gave back two floors and paid a termination fee of $11.2 million.

As of the YE2024 financials, the subject property reported a net cash flow (NCF) and debt service coverage ratio (DSCR) of $58.6 million and 1.70 times (x), respectively, compared with the YE2023 figures of $73.5 million and 2.14x, respectively. The most recent financials do not reflect the full departure of Cravath, which is expected to push the DSCR below break even.

During the July 2024 rating action, Morningstar DBRS conducted a dark-value analysis for the subject given the possibility that the property could become nearly fully vacant within the next few years for the reasons described above. In the analysis for this review, Morningstar DBRS adjusted that scenario to reflect updated leasing assumptions. Morningstar DBRS concluded to two years of downtime, with a market rent of $70.00 per square foot (psf) and a stabilized vacancy rate of 15.0%, which was based on the most recent submarket vacancy rates reported by Reis. An expense ratio of 44.5% was applied, based on the annualized figures for the trailing six months ended June 30, 2024, resulting in a Morningstar DBRS Stabilized NCF of $81.9 million, which is an increase from the $79.1 million derived in July 2024. A cap rate of 9.0% was applied, supported by market trends and a 100 basis point dark-value adjustment to account for the time and risk to re-tenant the space. Tenant improvements of $175 psf and leasing commissions of 4.0% were assumed, based on more recent available data on file with Morningstar DBRS. The total leasing cost to stabilize was $547.9 million, based on a two-year downtime adjustment given the size of the property.

The analysis resulted in a Morningstar DBRS Dark Value of $361.5 million and a whole-loan loan-to-value ratio of approximately 260%. The resulting dark value decreased from the previous Morningstar DBRS Dark Value, derived in July 2024, of $503.7 million, largely because of the increased tenant improvement cost assumption, which was increased from the July 2024 figure of $90 psf, to $175 psf, based on updated market data and other information available to Morningstar DBRS. If the loan were ultimately liquidated at or near this value, Morningstar DBRS expects losses could be realized through the Class A certificate, supporting the URN credit rating action with this review. Although the Morningstar DBRS Dark Value suggests realized losses could be significant, it is noteworthy that there remain two years on the loan term, with a scheduled maturity in November 2027. The submarket demand appears relatively healthy, and the sponsors are experienced and well-capitalized real estate investors who are well positioned to reposition the property, albeit at a very high price.

Morningstar DBRS' credit ratings on the applicable classes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transactions' respective press releases at issuance.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued.

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 Factors in Credit Ratings (May 16, 2025) at https://dbrs.morningstar.com/research/454196.

Class X-A is an 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 (February 28. 2025) https://dbrs.morningstar.com/research/448963

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

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 info-DBRS@morningstar.com.

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.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings

Please see the 17g-7 disclosure report and/or the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

This credit rating is Under Review with Negative Implications. Generally, the conditions that lead to the assignment of reviews are resolved within a 90-day period.

DBRS Limited
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Tel. +1 416 593-5577

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

North American Commercial Mortgage Servicer Rankings (August 23, 2024),
https://dbrs.morningstar.com/research/438283

Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (September 19, 2024)
https://dbrs.morningstar.com/research/439702

Legal Criteria for U.S. Structured Finance (December 3, 2024)
https://dbrs.morningstar.com/research/444064

North American Single-Asset/Single-Borrower Ratings Methodology (February 28, 2025)
https://dbrs.morningstar.com/research/448962

A description of how Morningstar DBRS analyzes structured finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/417279. (July 17, 2023)

For more information on this credit or on this industry, visit dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.