KBRA Downgrades Three Classes and Affirms All Other Ratings for DBWF 2016-85T

KBRA downgrades three classes of certificates and affirms all other outstanding ratings for DBWF 2016-85T, a CMBS single-asset single-borrower transaction. The rating actions follow a surveillance review of the transaction, which has exhibited a decline in performance as occupancy has declined and expenses have increased meaningfully since securitization. The loan also faces some uncertainty as 65% of the base rent expires in 2026, the same year as the final maturity of the loan. The actions also consider the strong quality and favorable location of the collateral property.

The transaction collateral is a $271.0 million portion of a $396.0 million, non-recourse first-lien mortgage loan. The whole mortgage loan is represented by six senior pari passu A notes totaling $255.0 million and two subordinate B notes totaling $141.0 million. The trust collateral includes two senior pari passu A notes totaling $130.0 million and the two subordinate B notes.

The loan is collateralized by the borrower’s fee simple interest in an 11-story, 639,389-sf Class-A office building located at 85 Tenth Avenue between West 15th Street and West 16th Street, in the Manhattan borough of New York City.

The review utilized information from the trustee and servicer to determine KNCF. The analysis produced a KNCF of $26.9 million and a KBRA value of $369.7 million ($584 per sf). The resulting in-trust KLTV of 110.2% is up from 98.4% at last review and from 83.9% at securitization. KBRA maintains a KPO of Underperform on the loan due to a decline in occupancy and financial performance since issuance.

Details concerning the classes with ratings changes are as follows:

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