Press Release|CMBS

KBRA Downgrades Five Ratings, Affirms Three Ratings, and Withdraws Three Ratings for WFCM 2015-C26

21 Jul 2025 | New York

KBRA downgrades the ratings of five classes of certificates and affirms all other outstanding ratings for WFCM 2015-C26, a $54.4 million CMBS conduit transaction. Simultaneously, KBRA removes the ratings from Watch Downgrade (DN), where they were placed on April 22, 2025. The rating actions follow a surveillance review of the transaction, which has exhibited an increase in interest shortfalls since KBRA's last ratings change in August 2024 and a reduction in the outstanding balances of certificates at the bottom of the capital structure.

Contemporaneous to the affirmations and downgrades of the ratings of the eight outstanding classes, KBRA subsequently withdraws the ratings of three classes of interest-only (IO) certificates in accordance with KBRA’s Methodology for Rating Interest-Only Certificates, as there are fewer than 10 loans remaining in the pool.

All outstanding ratings were initially placed on Watch Downgrade (DN) due to principal write-downs and interest shortfalls reported in February, March, and April 2025 remittance reports. The principal write-downs were primarily caused by holdbacks related to ongoing litigation involving the Aloft Houston by the Galleria loan, which exited the pool in February 2024 after originator Argentic Real Estate Finance LLC repurchased the loan as required by a July 2023 judgment in favor of the Trust. The reduction of principal and notional balances for certain classes may be temporary, considering a release of the holdback could reverse some of the realized losses and interest shortfalls. However, an updated docket schedule for the litigation involving the Aloft Houston by the Galleria loan indicates the holdback may remain in place for an extended period – longer than the 90 days initially indicated by the special servicer.

As of the July 2025 remittance period, there are five specially serviced loans remaining in the pool. All five loans are K-LOCs and four of the loans (57.0%) have estimated losses. The details of the pool’s assets are outlined below.

44 Plaza (largest, 43.8%, K-LOC, Underperform, Specially Serviced)

The loan is collateralized by a 167,686 sf multi-tenant anchored retail center in Poughkeepsie, New York. The property is grocery-anchored by Stop & Shop (56.6% of total base rent) pursuant to a lease that expires in December 2030.
KBRA maintains the loan’s K-LOC designation and KPO of Underperform due to maturity default. The loan transferred to the special servicer in January 2025 shortly after the borrower failed to pay off the loan at maturity. According to the servicer, the borrower is negotiating for forbearance to allow time to sell the collateral property. According to the December 2024 rent roll, the property was 98.8% leased; however, accounting for the bankruptcy of the second-largest tenant, Big Lots (19.5% of collateral sf), the property was 79.3% leased.
The servicer-reported occupancies and DSCs are: 99.0% / 1.29x (FY 2024), 90.0% / 0.95x (FY 2023); at issuance these were 96.1% / 1.36x. KBRA’s analysis resulted in an estimated loss of $6.7 million (28.1% estimated loss severity) on the $23.8 million loan balance. The estimated loss is based on a KBRA value of $17.2 million ($102 per sf), which was derived from KNCF of $1.6 million and a capitalization rate of 9.25%.

Roseville Square (2nd largest, 43.0%, K-LOC, Underperform, Specially Serviced)

The loan is collateralized by a 218,309 sf grocery-anchored retail center in Roseville, California, 18 miles northeast of Sacramento. The property has five single-story buildings and two outparcels.
KBRA maintains the loan’s K-LOC designation and KPO of Underperform based on its status with the special servicer. The loan transferred to the special servicer in April 2025 following a maturity default in February 2025 and a subsequent 60-day forbearance period. The loan is in early stages of workout and the servicer is dual-tracking forbearance negotiations with foreclosure.
The servicer-reported occupancies and DSCs are: 100% / 1.85x (YTD March 2025), 100% / 2.17x (FY 2024); at issuance these were 74.1% / 1.41x. At this time, KBRA does not estimate a loss on $23.4 million loan balance.

The remaining three assets account for 13.1% of the pool balance:

University Circle – 118 Flats Square (3th largest, 5.4%) and University Circle – 118 Flats Circle (5th largest, 3.0%) are collateralized by an 18-unit and 10-unit multifamily property, respectively. The properties are located next to each other in Cleveland, Ohio, adjacent to the campus of Case Western Reserve University. KBRA identifies the two loans as K-LOCs due to their non-performing matured status. The affiliated borrower for the two loans was unable to secure refinancing for the properties and the loans transferred to the special servicer in April 2025 due to maturity default. KBRA’s analysis resulted in estimated losses of $476,000 (16.3% estimated loss severity) and $435,000 (27.0% estimated loss severity) for the 118 Flats Square loan ($2.9 million balance) and the 118 Flats Circle loan ($1.6 million balance), respectively. The estimated losses are based on KBRA liquidation values of $2.4 million ($135,947 per unit) for 118 Flats Square and $1.2 million ($119,858 per unit) for 118 Flats Circle.
Walgreens – Columbus (4th largest, 4.8%, K-LOC, Matured Non-Performing) is collateralized by a 14,490 sf freestanding retail building located in Columbus, Ohio. The loan transferred to the special servicer in December 2024 due to maturity default. The collateral is leased to Walgreens through October 2078, but the tenant has a lease expiration in 2027 and no longer operates at the location. A receiver for the property was appointed in May 2025 and the building is available for sublease. KBRA’s analysis resulted in an estimated loss of $588,000 (22.5% estimated loss severity) on the $2.6 million loan balance. The estimated loss is based on an April 2025 appraisal value of $2.1 million ($145 per sf).

Details concerning the ratings changes are as follows:

Class D to C (sf) from BBB- (sf) DN
Class E to D (sf) from BB- (sf) DN
Class F to D (sf) from B- (sf) DN
Class X-C to D (sf) from BB- (sf) DN
Class X-D to D (sf) from B- (sf) DN

Details concerning the ratings affirmations are as follows:

Class C at A (sf)
Class PEX at A (sf)
Class X-B at AAA (sf)

Details concerning the withdrawn ratings are as follows:

Class X-B to WR (sf) from AAA (sf)
Class X-C to WR (sf) from D (sf)
Class X-D to WR (sf) from D (sf)

Rating Sensitivities

Future rating actions will be dependent upon the ongoing assessment of the timing and likelihood of ultimate payment of principal and accrued interest on the rated certificates. The assessment will consider the expected and actual losses on the remaining assets in the transaction, as well as the magnitude and extent of interest shortfalls, if any, on the certificates.

To access ratings and relevant documents, click here.

KBRA Downgrades Five Ratings, Affirms Three Ratings, and Withdraws Three Ratings for WFCM 2015-C26

Related Publications

Methodologies