DBRS Morningstar Confirms Ratings on All Classes of CSMC Trust 2017-MOON

DBRS Limited (DBRS Morningstar) confirmed its ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2017-MOON issued by CSMC Trust 2017-MOON as follows:

-- Class A at AAA (sf)
-- Class X at AAA (sf)
-- Class B at AA (high) (sf)
-- Class C at AA (low) (sf)
-- Class D at A (low) (sf)
-- Class E at BB (high) (sf)
-- Class HRR at BB (high) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of this transaction, which remains in line with DBRS Morningstar’s expectations at issuance. The five-year loan is interest-only (IO) and it’s scheduled to mature in July 2022. The loan is secured by Two Independence Square, a Class A office property in Washington, D.C. within the Southwest Federal Center, a business district mostly occupied by branches of the U.S. government, and just south of the National Mall and Capitol building. The trust debt is composed of a $64.0 million senior pari passu participation and a $61.7 million subordinate B note; the whole loan totals $225.7 million including all senior and junior notes. The sponsor for this loan is structured as a U.S. real estate investment trust owned by Hana Financial Group; Korea Investment & Securities Co., Ltd.; and Samsung Securities Co., Ltd.

The property is LEED Gold certified and has been the National Aeronautics and Space Administration’s (NASA) headquarters since its construction in 1992. It is 98.6% leased to NASA with a lease expiration in August 2028 and no termination options. As part of its lease renewal in 2013, NASA invested an additional $42 million into its space and the previous owner invested approximately $86.3 million to renovate the building exteriors and upgrade security. The remaining 8,644 square feet (1.4% of the net rentable area) is leased to three ground-floor retail tenants, all with leases extending beyond the loan maturity. The subject has remained 100% occupied since issuance. The loan reported a year-end (YE) 2021 net cash flow (NCF) of $21.3 million, compared with the YE2020 NCF of $21.0 million and the DBRS Morningstar NCF of $20.2 million.

The property benefits from long-term tenancy with a high-quality tenant that is backed by the credit of the U.S. Federal Government, excellent location, historical equity contributions and tenant investment, and no lease rollover in the near to medium term. The loan continues to perform as expected and DBRS Morningstar believes it is on track to secure takeout refinancing prior to maturity.

ESG CONSIDERATIONS
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 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 Morningstar 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 North American CMBS Surveillance Methodology (March 4, 2022), 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.

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