DBRS Morningstar Confirms All Classes of DBWF 2015-LCM Mortgage Trust

DBRS, Inc. (DBRS Morningstar) confirmed all ratings on the Commercial Mortgage Pass-Through Certificates, Series 2015-LCM (the Certificates) issued by DBWF 2015-LCM Mortgage Trust as follows:

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

DBRS Morningstar also changed the trends on Classes A-1, A-2, B, C, D, and X-A to Stable from Negative. The trends on Classes on E and F remain Negative because of the continuing performance challenges associated with the Coronavirus Disease (COVID-19) global pandemic. The rating confirmations reflect the generally stable performance since the last DBRS Morningstar review of this transaction, with no delinquencies or defaults reported by the servicer.

The collateral for the loan is the fee-simple and leasehold interests in the 2.1 million-square-foot (sf) Lakewood Center mall in Lakewood, California, within Los Angeles County. The mall was originally constructed in 1951 and has been expanded and renovated many times over the years with the last major expansion in 2009. The mall is owned and operated by The Macerich Company, which purchased the remaining 49% ownership interest in the subject in 2014 for a total consideration of approximately $1.8 billion. The Certificates are backed by a $290.0 million loan consisting of a $120.0 million senior note and two junior notes each with a principal balance of $85.0 million. The three notes have 11-year terms and amortize over 30-year terms with loan maturity in June 2026. As part of the financing, but not part of the trust collateral for this security, there is also a $120.0 million A-1 companion loan, which ranks pari passu with the senior trust note and is securitized in the DBRS Morningstar-rated COMM 2015-CCRE24 Mortgage Trust transaction. The whole loan totals $410.0 million, or $198 per sf. As of the August 2021 remittance, the trust debt had amortized by 9.0% with a current trust balance of $263.8 million.

The fee-simple collateral interest totals 1.37 million sf, while the remaining collateral is ground leased to major tenants. Anchor tenants include Macy’s (17.6% of net rentable area (NRA)), Costco Wholesale (8.1% of NRA), JCPenney (7.9% of NRA), Target (7.7% of NRA), and The Home Depot (6.4% of NRA). Other major tenants include Forever 21, Burlington Coat Factory, Nordstrom Rack, Best Buy, and Albertsons. Lakewood Center’s enclosed mall is primarily one story, but the attached anchors, including Round 1 Bowling, encompass two stories. In April 2021, the mall’s seventh-largest tenant, Pacific Theatres, representing 4.3% of the NRA, vacated as part of the company’s bankruptcy filing. Other notable large tenants that have previously filed for bankruptcy include JCPenney and 24 Hour Fitness (2.2% of NRA), both of which have emerged from bankruptcy and remain open for business at the subject property. The lease for JCPenney expires in January 2022, and the lease for 24 Hour Fitness expires in 2027.

Although the property’s performance had been stable with an occupancy rate above 90% since issuance, occupancy declined to 93% as of the March 2021 rent roll from a prior high of 99% as of YE2019. The drop in occupancy has resulted in a decrease in cash flow as the YE2020 net cash flow (NCF) decreased 19.1% year over year and was 8.8% lower than the DBRS Morningstar NCF at issuance. Despite these concerns, the debt service coverage ratio (DSCR) has remained generally healthy, with a YE2020 DSCR of 1.34 times (x), compared with the YE2019 DSCR of 1.65x, YE2018 DSCR of 1.65x, and YE2017 DSCR of 1.62x.

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/373262.

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

The DBRS Viewpoint platform provides additional information on this transaction and underlying loans including DBRS Morningstar metrics, commentary, servicer-reported cash flows, and other performance-related data.

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com. The platform includes issuer and servicer data for most outstanding CMBS transactions (including non-DBRS Morningstar rated), as well as loan-level and transaction-level commentary for most DBRS Morningstar-rated and -monitored transactions.

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

The principal methodology is the North American CMBS Surveillance Methodology (March 26, 2021), 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.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.

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.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar’s outlooks and ratings are monitored.

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