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Rating Action:

Moody's affirms five classes of COMM 2015-DC1

25 Jul 2019

Approximately $913.8 million of structured securities affected

New York, July 25, 2019 -- Moody's Investors Service, ("Moody's") has affirmed the ratings on five classes in COMM 2015-DC1 Mortgage Trust, Commercial Mortgage Pass-Through Certificates as follows:

Cl. A-2, Affirmed Aaa (sf); previously on Feb 1, 2018 Affirmed Aaa (sf)

Cl. A-3, Affirmed Aaa (sf); previously on Feb 1, 2018 Affirmed Aaa (sf)

Cl. A-4, Affirmed Aaa (sf); previously on Feb 1, 2018 Affirmed Aaa (sf)

Cl. A-5, Affirmed Aaa (sf); previously on Feb 1, 2018 Affirmed Aaa (sf)

Cl. A-SB, Affirmed Aaa (sf); previously on Feb 1, 2018 Affirmed Aaa (sf)

RATINGS RATIONALE

The ratings on five P&I classes were affirmed because the transaction's key metrics, including Moody's loan-to-value (LTV) ratio, Moody's stressed debt service coverage ratio (DSCR) and the transaction's Herfindahl Index (Herf), are within acceptable ranges.

Moody's rating action reflects a base expected loss of 6.1% of the current pooled balance, compared to 5.9% at Moody's last review. Moody's base expected loss plus realized losses is now 5.8% of the original pooled balance, the same as the last review. Moody's provides a current list of base expected losses for conduit and fusion CMBS transactions on moodys.com at http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF215255.

FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS:

The performance expectations for a given variable indicate Moody's forward-looking view of the likely range of performance over the medium term. Performance that falls outside the given range can indicate that the collateral's credit quality is stronger or weaker than Moody's had previously expected.

Factors that could lead to an upgrade of the ratings include a significant amount of loan paydowns or amortization, an increase in the pool's share of defeasance or an improvement in pool performance.

Factors that could lead to a downgrade of the ratings include a decline in the performance of the pool, loan concentration, an increase in realized and expected losses from specially serviced and troubled loans or interest shortfalls.

METHODOLOGY UNDERLYING THE RATING ACTION

The principal methodology used in these ratings was "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in July 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

DEAL PERFORMANCE

As of the July 2019 distribution date, the transaction's aggregate certificate balance has decreased by 5% to $1.3 billion from $1.4 billion at securitization. The certificates are collateralized by 63 mortgage loans ranging in size from less than 1% to 8.4% of the pool, with the top ten loans (excluding defeasance) constituting 50% of the pool. One loan, constituting 1.9% of the pool, has an investment-grade structured credit assessment. Five loans, constituting 4.8% of the pool, have defeased and are secured by US government securities.

Moody's uses a variation of Herf to measure the diversity of loan sizes, where a higher number represents greater diversity. Loan concentration has an important bearing on potential rating volatility, including the risk of multiple notch downgrades under adverse circumstances. The credit neutral Herf score is 40. The pool has a Herf of 25, compared to 28 at Moody's last review.

Fourteen loans, constituting 24% of the pool, are on the master servicer's watchlist. The watchlist includes loans that meet certain portfolio review guidelines established as part of the CRE Finance Council (CREFC) monthly reporting package. As part of Moody's ongoing monitoring of a transaction, the agency reviews the watchlist to assess which loans have material issues that could affect performance.

One loan has liquidated resulting in a minor loss. Three loans, constituting 5.1% of the pool, are currently in special servicing. The largest specially serviced loan is the 115 Mercer ($37.0 million -- 2.8% of the pool), which is secured by a simple fee interest in two condominium units containing 7,500 square feet (SF) of retail space, located between Prince and Spring Street in the SoHo submarket in Manhattan. One of the tenants, Deryk Lam, recently terminated their lease that was set to expire in 2024. The special servicer is dual tracking foreclosure. Moody's has lowered its value since securitization.

The second largest specially serviced loan is 200 West Second Street ($26.0 million -- 1.9% of the pool), which is secured by the fee interest in a 53,000 SF site in Winston-Salem, North Carolina. The property is also encumbered with a $12.4 million mezzanine loan. The fee interest is improved with a 240,000 SF, 20-story, Class A office tower known as the BB&T Financial Center. The property is 100% leased to BB&T through March 2023 and serves as the bank's US headquarters. The property transferred to the special servicer in January 2018 due to imminent default as Wells Fargo Bank, N.A. notified Lender and Borrower that it is exercising its right to terminate the Clearing Account Agreement effective February 5, 2018. Per a press release issued on February 22, 2016 by the US Attorney's Office, one of the individuals controlling the borrowing entity has been indicted by the US Attorney's Office in the Northern District of Georgia for their alleged role in a scheme to fraudulently induce investors into purchasing the Iraqi dinar (the Iraqi currency), by spreading misinformation about the potential of the Iraqi dinar in order to profit from sale of the currency. The superseding indictment dated March 7, 2017 specifies that the real property that is collateral for the loan as being subject to forfeiture upon the indicted individual's conviction. One of the sponsors was convicted in October 2018 on 11 counts. The sentencing has been pushed back. The special servicer will enforce any remedies once the underlying criminal action has been adjudicated.

Moody's has also assumed a high default probability for one poorly performing loan, constituting 0.6% of the pool, and has estimated an aggregate loss of $17.3 million (a 23% expected loss on average) from these troubled and specially serviced loans.

Moody's received full or partial year 2018 operating results for 100% of the pool (excluding specially serviced and defeased loans). Moody's weighted average conduit LTV is 119%, compared to 118% at Moody's last review. Moody's conduit component excludes loans with structured credit assessments, defeased and CTL loans, and specially serviced and troubled loans. Moody's net cash flow (NCF) reflects a weighted average haircut of 10% to the most recently available net operating income (NOI). Moody's value reflects a weighted average capitalization rate of 9.6%.

Moody's actual and stressed conduit DSCRs are 1.49X and 0.89X, respectively, compared to 1.53X and 0.91X at the last review. Moody's actual DSCR is based on Moody's NCF and the loan's actual debt service. Moody's stressed DSCR is based on Moody's NCF and a 9.25% stress rate the agency applied to the loan balance.

The loan with a structured credit assessment is the Maritime Hotel Loan ($25.0 million -- 1.9% of the pool), which is secured by a 126-key hotel located on West 16th Street in Manhattan's Chelsea neighborhood, just north of the Meatpacking District. Since acquiring the property in 2002, the sponsors have invested approximately $21.0 million ($166,667/key), along with a $1.6 million renovation of the Cabanas event space. Amenities at the property include a fitness center, the Cabanas event space, and three food-and-beverage (F&B) outlets. The property's occupancy rate has ranged from 77.5% in 2016 to 84.1% in 2018. Moody's structured credit assessment and stressed DSCR are baa1 (sca.pd) and 1.98X, respectively.

The top three conduit loans represent 24% of the pool balance. The largest loan is the 26 Broadway Loan ($120.0 million -- 9.0% of the pool), which represents a pari-passu portion of a $220 million first mortgage loan. The property is also encumbered by $50 million of mezzanine debt held outside of the trust. The loan is secured by a 29-story, 840,000 SF landmark Class B office building located in Manhattan's financial district on the corner of Broadway and Beaver Street. The building contains approximately 740,000 SF of office, 26,000 SF of storage space and 19,000 SF of retail space. As of December 2018, the property was almost 93% leased, compared to 87% in September 2017. Almost 18% of the net rentable area (NRA) leases expire between 2019 and 2021, with 10% expiring in 2019. Performance improved in 2018 as revenue outpaced expense growth. Moody's LTV and stressed DSCR are 130% and 0.75X, respectively, the same as Moody's last review.

The second largest loan is the Pinnacle Hills Promenade Loan ($112.2 million -- 8.4% of the pool), which is secured by the fee interest in an 841,000 SF component of a 1,240,000 SF anchored outdoor lifestyle center and power center located in Rogers, Arkansas. The property is located off of I-540, approximately six miles from Wal-Mart's world headquarters. The lifestyle component of the property is anchored by a Dillard's (non-collateral), J.C. Penney, and Malco Theatres. The power center component of the property is anchored by a Gordman's, Harverty's Furniture, TJMaxx, Bed Bath & Beyond, and Petsmart. The overall occupancy rate at the property was 95.4% as of December 2018, compared to 93% in September 2017. The loan has amortized almost 8% since securitization. Moody's LTV and stressed DSCR are 108% and 1.05X, respectively, compared to 111% and 1.02X at the last review.

The third largest loan is the Hampton Inn & HIX Herald Square Loan ($85.0 million -- 6.4% of the pool), which is secured by a portfolio of two limited-service hotels, totaling 283 keys, located in New York City. The Hampton Inn United Nations is a 21-story, 148-key, limited service hotel located on East 43rd Street in the Midtown East submarket of New York City. The property operates under a franchise agreement with Hampton Inn which expires in March 2030. The Holiday Inn Express is a 19-story, 135-key, limited service hotel located on West 36th Street in the Herald Square submarket of New York City. The property operates under a franchise agreement with Holiday Hospitality Franchise LLC, which expires in September 2029. The loan was divided into a pooled $85.0 million component and a $13.0 million non-pooled component, which is also held by the trust and secures the Rake Class HIX. Moody's LTV and stressed DSCR are 144.0% and 0.76X, respectively, the same as Moody's last review.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions of the disclosure form.

The analysis includes an assessment of collateral characteristics and performance to determine the expected collateral loss or a range of expected collateral losses or cash flows to the rated instruments. As a second step, Moody's estimates expected collateral losses or cash flows using a quantitative tool that takes into account credit enhancement, loss allocation and other structural features, to derive the expected loss for each rated instrument.

Moody's did not use any stress scenario simulations in its analysis.

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Paul Cognetti
Asst Vice President - Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Romina Padhi
VP - Senior Credit Officer
Structured Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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