DBRS Morningstar Confirms All Ratings on Citigroup Commercial Mortgage Trust 2017-B1

DBRS Limited (DBRS Morningstar) confirmed the following ratings of the Commercial Mortgage Pass-Through Certificates, Series 2017-B1 issued by Citigroup Commercial Mortgage Trust 2017-B1:

-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-AB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class B at AA (high) (sf)
-- Class C at A (high) (sf)
-- Class X-D at BBB (high) (sf)
-- Class D at BBB (sf)
-- Class X-E at BB (high) (sf)
-- Class E at BB (sf)
-- Class F at B (high) (sf)
-- Class X-F at B (sf)
-- Class G at B (low) (sf)

All trends are Stable. With this action, DBRS Morningstar removed the Interest in Arrears designation for Class G.

The rating confirmations reflect the overall stable performance of the transaction. As of the January 2021 remittance, all 48 of the original loans remain in the pool, with an aggregate trust balance of $917.3 million, representing a collateral reduction of approximately 2.6% since issuance as a result of scheduled loan amortization. During the next 12 months, two loans, representing 5.9% of the pool, are scheduled to mature. Both loans benefit from strong credit metrics and are expected to successfully repay. Two loans, representing 1.7% of the pool, have been fully defeased. There are two loans, representing 2.0% of the pool, that are in special servicing, while nine loans, representing 18.2% of the pool, are being monitored on the servicer’s watchlist.

The largest loan on the servicer’s watchlist is the Old Town San Diego Hotel Portfolio loan (Prospectus ID#4, 5.6% of the pool), which is secured by two cross-collateralized and cross-defaulted, limited-service hotels within San Diego’s historic Old Town neighborhood. The loan was previously transferred to special servicing in August 2020 for monetary default due to effects of the Coronavirus Disease (COVID-19) pandemic and was later returned to the master servicer in May 2021 after a loan modification was approved. The loan is now being monitored for a low debt service coverage ratio (DSCR) stemming from a decline in occupancy. While coverage remains below breakeven, cash flow and occupancy have recently improved, with the servicer reporting respective figures of $2.6 million (resulting in a DSCR of 0.72 times (x)) and 49.6% as of Q2 2021. Comparatively, the YE2020 figures were $150,000 (with a DSCR of 0.04x) and 33.0%, respectively. As of June 2021, occupancy, average daily rate (ADR), and revenue per available room (RevPAR) were reported at 50.0%, $120.62, and $59.94, respectively, compared to YE2020 occupancy, ADR, and RevPAR of 33.2%, $122.63, and $40.70, respectively.

The transaction benefits from four loans that are shadow-rated investment grade: General Motors Building (Prospectus ID#1, 10.1% of the pool), Lakeside Shopping Center (Prospectus ID#2, 6.4% of the pool), Two Fordham Square (Prospectus ID#5, 5.7% of the pool), and Del Amo Fashion Center (Prospectus ID#18, 2.2% of the pool). With this review, DBRS Morningstar confirms that the performance of these four loans are consistent with the investment-grade 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, X-D, X-E, and X-F 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#4 – Old Town San Diego Hotel Portfolio (5.6% 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 unless 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/baseline-macroeconomic-scenarios-application-to-credit-ratings.

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.

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