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KBRA Downgrades Two Ratings and Affirms All Other Ratings for WFCM 2017-C40

25 Sep 2026   |   New York

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KBRA downgrades the ratings of two classes of certificates and affirms all other outstanding ratings for WFCM 2017-C40, a $612.4 million CMBS conduit transaction. The rating actions follow a surveillance review of the transaction, which has exhibited a worsening in pool performance since KBRA's last review. The rating actions also reflect KBRA’s estimated losses for three K-LOCs (18.0% of the pool balance) and the resulting loss adjusted C/E levels.

As of the September 2026 remittance period, there is one specially serviced asset (1.0%), which remains current. KBRA identified eight K-LOCs (21.1%), including the specially serviced asset. Of the K-LOCs, three (18.0%) have estimated losses. The K-LOCs are depicted in the table below:

Loss Given Default (000s) Loss Severity 1 225 & 233 Park Avenue South OF $60,000 9.8% N C Y Lease Rollover 09/21/2023 $20,657 34.4% 2 Mall of Louisiana RT $44,232 7.2% N C N Maturity 08/27/2026 $5,445 12.3% 21 Starwood Capital Group Hotel Portfolio LO $6,107 1.0% Y C Y Specially Serviced 03/25/2025 $1,432 23.4% 34 Candlewood Suites Harrisburg-Hershey LO $5,119 0.8% N C N Occupancy 08/03/2026 - - 36 Wanamaker Crossing RT $4,479 0.7% N C N DSCR 08/09/2024 - - 40 Sterling Oaks MF $4,141 0.7% N C N DSCR 07/08/2024 - - 42 Boulevard Square I MU $3,567 0.6% N C N Occupancy 01/09/2025 - - 61 Creekview Apartments MF $1,750 0.3% N C N DSCR 01/21/2026 - - Total K-LOCs $129,395 21.1% $27,535 1. K-LOC Date is the date when the most recent K-LOC was initially determined. 2. Loss Given Default assumes a 100% probability of default (PD). KBRA may determine a lower PD when estimating losses to a transaction. KBRA Estimated 2 K-LOCs Prosp. ID Loan Name Prop Type Current In- Trust Balance (000s) % of Deal Balance SS Loan Status Mod (Y/N) Primary K-LOC Reason K-LOC Date 1
Source: KBRA

Excluding the K-LOCs with estimated losses, the transaction's WA KLTV is 91.2%, compared to 97.0% at last review and 95.6% at securitization. The WA KDSC is 1.92x, in line with last review and down from 2.03x at securitization.

Details concerning the classes with ratings changes are as follows:

  • Class F to B (sf) from BB- (sf)
  • Class G to CCC (sf) from B (sf)

To access ratings and relevant documents, click here.

Click here to view the report.

Related Publication

Methodologies

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

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