KBRA Downgrades Five Ratings and Affirms All Other Ratings for COMM 2016-DC2

KBRA downgrades the ratings of five classes of certificates and affirms all other outstanding ratings of COMM 2016-DC2, a $610.2 million CMBS conduit transaction. The rating actions follow a surveillance review of the transaction, which has exhibited an increase in KBRA's estimated losses from K-LOCs including two loans (16.1% of the pool balance) in the top ten. The ratings also consider increased certificate C/E levels due to amortization and loan payoffs, as well as deleveraging due to defeasances.

As of the September 2024 remittance period, there is one specially serviced asset (1.1%) which is in foreclosure.

KBRA identified five K-LOCs (18.9%), three of which (17.2%) have estimated losses. These include:

Two of the top 10 loans (16.1%)

North Point Center East (largest, 9.6%, 19.8% estimated loss severity)
Intercontinental Kansas City Hotel (3rd largest, 6.5%, 8.7%)

One other K-LOC has an estimated loss:

Colony Square Atascadero (1.1%, 45.9%)

The remaining two K-LOCs do not have estimated losses and represent 1.7% of the pool balance.

Excluding the K-LOCs with estimated losses, the transaction’s WA KLTV is 96.2%, compared to 100.6% at last review and105.7% at securitization. The KDSC is 1.50x, compared to 1.56x at last review and 1.53x securitization.

Details concerning the ratings changes are as follows:

Class E to BB- (sf) from BB+ (sf)
Class F to B (sf) from BB- (sf)
Class G to CCC (sf) from B- (sf)
Class X-D to B (sf) from BB- (sf)
Class X-E to CCC (sf) from B- (sf)

KBRA Downgrades Five Ratings and Affirms All Other Ratings for COMM 2016-DC2

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