DBRS Morningstar Confirms All Classes of Wells Fargo Commercial Mortgage Trust 2018-C45

DBRS, Inc. (DBRS Morningstar) confirmed the ratings of all classes of the Commercial Mortgage Pass-Through Certificates, Series 2018-C45 issued by Wells Fargo Commercial Mortgage Trust 2018-C45 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 B at AA (high) (sf)
-- Class X-B at AA (low) (sf)
-- Class C at A (high) (sf)
-- Class X-D at A (low) (sf)
-- Class D at BBB (high) (sf)
-- Class E-RR at BBB (sf)
-- Class F-RR at BBB (low) (sf)
-- Class G-RR at BB (sf)
-- Class H-RR at B (high) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance when the trust comprised 49 loans secured by 89 commercial and multifamily properties with a trust balance of $658.8 million. Per the November 2021 remittance report, 48 loans secured by 88 properties remained in the trust with a trust balance of $637.5 million, representing a 3.2% collateral reduction. The collateral reduction was primarily attributed to the resolution of a previously specially serviced loan, Flats at East Bank (Prospectus ID#18), which was repaid in full in May 2021, well ahead of its loan maturity. Two loans, 181 Fremont Street (Prospectus ID#10; 3.1% of the trust balance) and CoolSprings Galleria (Prospectus ID#11; 3.0% of the trust balance), were shadow-rated investment grade at issuance. With this review, DBRS Morningstar confirms that the performance of these loans remains consistent with investment-grade loan characteristics. For additional information on these loans, please see the DBRS Viewpoint platform, for which information has been provided below.

Per the November 2021 remittance report, three loans, totaling 4.6% of the trust balance, are in special servicing and an additional eight loans, representing 21.6% of the trust balance, are on the servicer’s watchlist. The watchlisted loans are being monitored primarily because of a low debt service coverage ratio (DSCR) and low occupancy rate for the collateral properties. Commercial mortgage-backed security (CMBS) transactions have seen significant upticks in watchlisted and specially serviced loans in the last year because of the Coronavirus Disease (COVID-19) pandemic, which has had the greatest impact on hotel properties, given the pandemic-related extended closures and travel restrictions. The subject trust’s exposure to hotel properties is limited to five loans, totaling 6.6% of the trust balance, contributing to the generally stable overall performance in the last few years.

One loan, Hampton Inn Omaha West Dodge Road Old Mill (Prospectus ID#30; 1.0% of the trust balance), has been foreclosed, with the trust taking title to the collateral. The special servicer is in the process of liquidating the asset, a limited service, 110-key Hampton Inn hotel in Omaha, Nebraska. Based on the demand drivers for the subject highlighted at issuance, the property was significantly affected by the pandemic as corporate travel and group events came to a halt. The collateral was last appraised in June 2021 at $6.8 million, which is an improvement from the July 2020 appraised value of $5.7 million but well below the $11.5 million appraised value at issuance. The collateral was listed in an auction and the Ten-X website shows the property is in escrow, indicating a pending sale. DBRS Morningstar projects a loss to the trust but the impact will be minimal, given the small loan size.

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.

Classes X-A, X-B, and X-D 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.

DBRS Morningstar provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Prospectus ID#1 – Village at Leesburg (10.2% of the pool)
-- Prospectus ID#3 – Parkway Center (6.6% of the pool)
-- Prospectus ID#10 – 181 Fremont Street (3.1% of the pool)
-- Prospectus ID#11 – CoolSprings Galleria (3.0% of the pool)
-- Prospectus ID#30 – Hampton Inn Omaha West Dodge Road (1.0% of the pool)

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.

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/baseline-macroeconomic-scenarios-application-to-credit-ratings

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.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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