KBRA Downgrades Five Ratings and Affirms All Other Ratings for DBJPM 2016-C3

KBRA downgrades the ratings of five classes of certificates and affirms all other outstanding ratings for DBJPM 2016-C3, a $737.6 million CMBS conduit transaction. The rating actions follow a surveillance review of the transaction, which has exhibited overall stable pool performance with the exception of the pool's largest asset, Westfield San Francisco Centre (11.4%), which has had a meaningful increase in KBRA's estimated losses since our last ratings change in March 2024. The rating actions also take into account the deleveraging of the transaction from loan payoffs, amortization and defeasance.

As of the February 2025 remittance period, there is one specially serviced asset (11.4%), that is in foreclosure. KBRA identified four K-LOCs (20.5%), three of which (18.7%) have estimated losses. This includes:

Three of the top 10 loans (18.7%)

Westfield San Francisco Centre (largest, 11.4%, 97.2% estimated loss severity)
260 Townsend Street (8th largest, 3.8%, 48.0%)
Intercontinental Kansas City Hotel (9th largest, 3.5%, 6.3%)

The remaining K-LOC represents 1.7% of the pool balance.

Excluding the K-LOCs with estimated losses, the transaction’s WA KLTV is 83.7%, compared to 90.2% at KBRA's last ratings change and 95.6% at securitization. The KDSC is 1.93x, compared to 1.80x at KBRA's last ratings change and 1.94x at securitization.

Details concerning the ratings adjustments are as follows:

Class B to A (sf) from AA- (sf)
Class C to B- (sf) from BBB (sf)
Class D to CC (sf) from CCC (sf)
Class E to C (sf) from CC (sf)
Class X-C to CC (sf) from CCC (sf)

KBRA Downgrades Five Ratings and Affirms All Other Ratings for DBJPM 2016-C3

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