DBRS Morningstar Confirms All Ratings on CSAIL 2015-C4 Commercial Mortgage Trust

DBRS Limited (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass-Through Certificates, Series 2015-C4 issued by CSAIL 2015-C4 Commercial Mortgage Trust as follows:

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

All trends are Stable.

The rating confirmations and Stable trends reflect the generally stable performance of the transaction and positive developments for several loans since DBRS Morningstar’s last surveillance rating action in October 2021. As Coronavirus Disease (COVID-19) restrictions have eased across the United States within the past year, retail and hotel properties have significantly benefitted, including some that collateralize loans representing over 50% of the subject pool balance. In addition, one formerly specially serviced loan, 120 NE 39th Street Miami (Prospectus ID#14, 2.0% of the current pool balance), has returned to the master servicer and is no longer delinquent. The transaction also benefits from a moderate amount of defeasance, with 13 loans representing approximately 11% of the pool fully defeased. There are two small specially serviced loans in the pool, but DBRS Morningstar expects losses to be contained to the unrated Class NR certificate.

As of the August 2022 remittance, the trust consists of 84 of the original 87 loans with an aggregate principal balance of $844.7 million, reflecting a collateral reduction of approximately 10% since issuance. There are 14 loans, representing 25.7% of the pool, on the servicer’s watchlist. There are two loans, representing 1.3% of the pool, in special servicing, both of which are delinquent.

The largest loan in the transaction, Fairmont Orchid (Prospectus ID#1, 13.3% of the current pool), is secured by a full-service hotel in Kohala Coast, Hawaii. Hawaii implemented some of the strictest coronavirus restrictions in the United States, and many of those remained in place until March 2022. The loan was added to the servicer’s watchlist in November 2020 because of decreased occupancy and financial performance resulting from the coronavirus pandemic. At the time, the loan was reporting a below-breakeven net cash flow (NCF); however, as of YE2021, the property reported positive cash flow and a debt service coverage ratio (DSCR) of 2.14 times (x). Performance has since continued to improve, with a DSCR of 4.43x for the trailing 12 months (T-12) ended June 30, 2022, and NCF for the period reported at $19.1 million, well above the Issuer’s figure of $13.4 million, a product of an increase in revenue by more than $20 million from the Issuer’s figure. Prior to the onset of the pandemic, the loan consistently reported revenue and DSCR figures comfortably above the issuance figures. According to the May 2022 STR, Inc. report, the T-12 occupancy, average daily rate, and revenue per available room (RevPAR) figures were 60.6%, $503, and $305, respectively, with a T-12 RevPAR penetration rate of 78.7%.

The largest specially serviced loan, Dorsey Business Center III (Prospectus ID#48, 0.7% of the current pool), is secured by a Class B suburban office building in Elkridge, Maryland. The loan transferred to special servicing in October 2021 for payment default and remains delinquent. As of YE2021, the property was 42.1% occupied, falling from 91.8% at YE2019 after several tenants vacated the property at lease expiration. As a result, the DSCR is below breakeven. The October 2021 appraisal revalued the property at $5.3 million, decreasing from $9.1 million at issuance. As of August 2022, a receiver is in place and the property is listed for sale. Based on the October 2021 appraisal, DBRS Morningstar liquidated the loan with this review, with a loss severity exceeding 30.0%.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

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/396929/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings.

Classes X-A, X-B, X-D, X-F, and X-G 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 this transaction.

The DBRS 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.

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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