DBRS Morningstar Confirms Ratings on All Classes of A10 Permanent Asset Financing 2015-I, LLC

DBRS, Inc (DBRS Morningstar) confirmed its ratings on all classes of notes issued by A10 Permanent Asset Financing, 2015-I, LLC as follows:

-- Class A Notes at AAA (sf)
-- Class B Notes at A (high) (sf)
-- Class C Notes at BBB (low) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance. The pool consists of 38 loans secured by 43 office, retail, multifamily, self-storage, and industrial properties. There are nine loans, representing 23.2% of the pool, being monitored on the servicer’s watchlist. There are no loans in special servicing, and, according to the collateral manager, no borrowers have formally requested relief related to the Coronavirus Disease (COVID-19) pandemic.

The transaction originally had a maximum funded balance of $300.0 million, which was fully funded in May 2017, initiating a sequential paydown; however, earn-out facilities were drawn upon through May 2018. Since May 2017, there has been a collateral reduction of 17.3% from scheduled loan amortization and the repayment of four loans. None of the remaining loans are scheduled to mature until 2024.

The largest loan on the servicer’s watchlist, 205 W Wacker (Prospectus ID#5, 6.0% of pool), is secured by a 271,233-square-foot, 23-story Class B office building within the Central Loop submarket of downtown Chicago. The loan is being monitored after occupancy decreased to its current level of 71.1% when the property’s former largest tenant Salesforce (8.4% of net rentable area (NRA)) exercised an early termination option and vacated in September 2021. In conjunction with the termination, Salesforce paid a termination fee of $581,987. In addition to Salesforce, four minor tenants totaling 5.7% of NRA vacated upon expiration of their leases between Q1 2021 and Q2 2021. The vacating tenants reduced physical occupancy below the minimum threshold of 80%, and reduced underwritten debt service coverage ratio below the minimum threshold of 1.15 times, triggering a Reduced Performance Period. As a result, the loan will to continue to operate under a fixed excess cash flow sweep of $37,000 per month until the Reduced Performance Period is cured. As of the February 2022 remittance, the loan has a total of $2.8 million in reserves.

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.

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#5 – 205 W Wacker (6.0% 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 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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