DBRS Morningstar Confirms Ratings on All Classes of WFCM 2017-RB1

DBRS Limited (DBRS Morningstar) confirmed its ratings on all classes of the Commerial Mortgage Pass-Through Certificates, Series 2017-RB1 issued by Wells Fargo Commercial Mortgage Trust 2017-RB1 as follows:

-- Class A-4 at AAA (sf)
-- Class A-5 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 (low) (sf)
-- Class X-B at A (sf)
-- Class C at A (low) (sf)
-- Class X-D at BBB (sf)
-- Class D at BBB (low) (sf)
-- Class E-1 at BB (sf)
-- Class E at BB (low) (sf)
-- Class E-2 at BB (low) (sf)
-- Class F-1 at B (high) (sf)
-- Class EF at B (sf)
-- Class F at B (sf)
-- Class F-2 at B (sf)
-- Class EFG at B (low) (sf)
-- Class G at B (low) (sf)
-- Class G-1 at B (low) (sf)
-- Class G-2 at B (low) (sf)

Negative trends were maintained for the four lowest-rated certificates in Classes G-1, G-2, G, and EFG because of increased risks for a top 10 loan currently in special servicing, as further described below. All other trends are Stable. In addition, DBRS Morningstar discontinued the rating on Class A-3 as the class repaid with the November 2021 remittance.

The rating confirmations reflect the overall stable performance of the transaction since the 2017 issuance, when the pool had 37 loans and a balance of $571.1 million. As of the December 2021 remittance, there has been collateral reduction of just greater than 10%, with two loans repaid since issuance and three loans, representing 3.4% of the pool, fully defeased. There have been performance declines for some loans that have resulted in adds to the servicer’s watchlist, or in the case of the Anaheim Marriott Suites (Prospective ID#10, 4.2% of the pool balance), a transfer to special servicing.

The Anaheim Marriott Suites loan is secured by a hotel located near Disneyland and has been in default since Q2 2020. The servicer’s updates regarding the status of the loan workout have been minimal, but it appears discussions surrounding a loan modification stalled sometime in early 2021 and the servicer is reportedly dual-tracking foreclosure options while continuing discussions with the borrower and a third-party consultant engaged by the borrower. An updated appraisal was obtained in both 2020 and 2021 that showed value just outside the pari passu loan balance, but at approximately 70% of the issuance valuation. Given the extended delinquency and value decline from issuance, DBRS Morningstar believes a relatively moderate loss could be realized at resolution, driving the Negative trends for the four lowest-rated classes. For additional information on this loan, please see the loan commentary on the DBRS Viewpoint platform, for which information is provided below.

There are eight loans on the servicer’s watchlist, representing approximately 25% of the current pool balance, including five loans in the top 15. In general, the most noteworthy of the watchlisted loans is the 340 Bryant (Prospectus ID#17, 2.6% of the pool), which is secured by an office property in San Francisco that appears to be largely or even fully vacant. The largest tenant is WeWork, with about 75% of the space on lease that runs through 2029. WeWork has not been in occupancy of its space since sometime in late 2020 and last paid rent in December of the same year. The servicer has stated a termination agreement is in negotiation between the borrower and WeWork, but terms have not been provided to date. The only other tenant in place has a lease expiring in early 2022 and that space appears to be marketed for lease by JLL based on a December 2021 online leasing flyer that showed the space as immediately available. Despite the lack of rent payments from WeWork, the loan has remained current and, to date, the servicer has not reported a relief request from the borrower.

At issuance, DBRS Morningstar shadow-rated one loan investment grade, Merrill Lynch Drive (Prospectus ID#13, 3.6% of the pool). With this review, DBRS Morningstar confirms the performance of the loan remains in line with its respective shadow ratings.

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#9 – Hotel Wilshire (4.5% of the pool)
-- Prospectus ID#10 – Anaheim Marriott Suites (4.2% of the pool)
-- Prospectus ID#17 – 340 Bryant (2.6% 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 otherwise noted.

The principal methodology is 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.

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@dbrsmorningstar.com.

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.