DBRS, Inc. (DBRS Morningstar) confirmed the ratings on the following classes of the Commercial Mortgage Pass-Through Certificates, Series 2015-VFM issued by BBCMS Trust 2015-VFM.
Class A-1 at AAA (sf)
Class A-2 at AAA (sf)
Class X at AAA (sf)
Class B at AA (high) (sf)
Class C at AA (sf)
Class D at A (sf)
Class E at BBB (sf)
With this review, DBRS Morningstar removed Classes C, D, and E from Under Review with Negative Implications, where they were originally placed on April 24, 2020. DBRS Morningstar also changed the trends on Classes A-1, A-2, X, and B to Stable from Negative, while the trends on Classes C, D, and E are Negative. The Negative trends reflect DBRS Morningstar's concerns surrounding the collateral's performance amid the Coronavirus Disease (COVID-19) pandemic. The property's YE2020 net cash flow (NCF) declined 15.9% to $22.2 million, down from a prior of high of $26.4 million at YE2019.
The transaction is backed by an 11-year, fixed-rate mortgage loan secured by the fee and leasehold interests in the Vintage Faire Mall, a super-regional mall in Modesto, California. At closing, loan proceeds returned $277.2 million of equity to the sponsor. Before the loan closed, the sponsor paid off $97.6 million of previously existing debt on the property. The loan does not have an interest-only (IO) period and amortizes on a 30-year schedule. As of the September 2021 remittance report, the loan balance has amortized down to $248.8 million from the $280.0 million issuance amount and is scheduled to amortize down an additional 15% by maturity in March 2026. The loan sponsor, Macerich, is a publicly traded real estate investment trust headquartered in Santa Monica, California, and is one of the largest mall owners and operators in the United States. The sponsor invested more than $40.0 million in renovations and capital improvements from 2001 until loan origination in 2015. Macerich is also the property manager.
Of the subject's 1.1 million square feet (sf) of space, 692,693 sf serves as collateral. The mall represents the largest enclosed shopping center between Fresno and Sacramento, California, and is the only super-regional mall within a 50-mile radius, excluding three inferior properties outside the subject's trade area that are approximately 30 miles away in Stockton and Tracy, California. Anchors include Macy's Men's & Home and JCPenney. The mall is shadowed anchored by Macy's Women's & Children's, which is not part of the loan collateral.
In addition to the current anchor set, Sears and Forever 21 were in place at issuance but both vacated the property in 2019. Forever 21 was not part of the loan collateral as the tenant owned its own space. Despite Sears vacating the property, the sponsor was able to quickly backfill the anchor pad with Dick's Sporting Goods (Dick's) (relocated from an outparcel) and Dave & Buster's. Dick's, which occupies the lower space of the former Sears, opened in October 2020, while construction on the Dave & Buster's space was halted amid the pandemic. According to published reports, Dave & Buster's is likely to take occupancy in 2022. Additionally, the former Dick's outparcel is currently being built out for new tenant, HomeGoods, which is likely to take occupancy in Q4 2021.
The loan remains current and reported a YE2020 NCF of $22.2 million, equating to a debt service coverage ratio of 1.47 times. This figure represented a -15.9% variance from the YE2019 NCF, primarily because of a 15.1% decline in base rent year over year. As of YE2020, the property was 94.6% occupied, down slightly from the YE2019 occupancy rate of 99.7%. While the property's overall occupancy rate remains stable, the mall's outdoor component, The Villages, only contains two tenants: Apple and Chico's. In June 2021, Coach, one of the original stores when The Villages opened in 2008, vacated. According to the sales report for the trailing 12 months ended June 30, 2021, the property reported in-line tenant sales of $468 per square foot (psf) for tenants occupying less than 10,000 sf. This figure represented a -37.8% variance from the YE2019 amount of $753 psf.
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.
Class X is an IO certificate that references multiple rated tranches. The IO rating mirrors the lowest-rated applicable reference obligation tranche adjusted upward by one notch if senior in the waterfall.
All ratings are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by DBRS Morningstar.
The DBRS Viewpoint platform provides additional information on this transaction and underlying loans including DBRS Morningstar metrics, commentary, servicer-reported cash flows, and other performance-related data.
For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com. The platform includes issuer and servicer data for most outstanding CMBS transactions (including non-DBRS Morningstar rated), as well as loan-level and transaction-level commentary for most DBRS Morningstar-rated and -monitored transactions.
All figures are in U.S. dollars unless otherwise noted.
The principal methodology is North American CMBS Surveillance Methodology (March 26, 2021), which can be found on dbrsmorningstar.com under Methodologies & Criteria. For a list of the structured-finance-related methodologies that may be used during the rating process, please see the DBRS Morningstar Global Structured Finance Related Methodologies document, which can be found on dbrsmorningstar.com in the Commentary tab under Regulatory Affairs. Please note that not every related methodology listed under a principal structured finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.
The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482/baseline-macroeconomic-scenarios-application-to-credit-ratings.
The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.
Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.
Generally, the conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar's outlooks and ratings are monitored.
For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at firstname.lastname@example.org.
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Date Issued Debt Rated Action Rating Trend Attributesi
US = Lead Analyst based in USA
CA = Lead Analyst based in Canada
EU = Lead Analyst based in EU
UK = Lead Analyst based in UK
E = EU endorsed
U = UK endorsed
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08-Oct-21 Commercial Mortgage Pass-Through Certificates, Series 2015-VFM, Class A-1 Trend Change AAA (sf) Stb CA
08-Oct-21 Commercial Mortgage Pass-Through Certificates, Series 2015-VFM, Class A-1 Confirmed AAA (sf) Neg US
08-Oct-21 Commercial Mortgage Pass-Through Certificates, Series 2015-VFM, Class A-2 Trend Change AAA (sf) Stb CA
08-Oct-21 Commercial Mortgage Pass-Through Certificates, Series 2015-VFM, Class A-2 Confirmed AAA (sf) Neg US
08-Oct-21 Commercial Mortgage Pass-Through Certificates, Series 2015-VFM, Class X Trend Change AAA (sf) Stb CA
08-Oct-21 Commercial Mortgage Pass-Through Certificates, Series 2015-VFM, Class X Confirmed AAA (sf) Neg US
08-Oct-21 Commercial Mortgage Pass-Through Certificates, Series 2015-VFM, Class B Trend Change AA (high) (sf) Stb CA
08-Oct-21 Commercial Mortgage Pass-Through Certificates, Series 2015-VFM, Class B Confirmed AA (high) (sf) Neg US
08-Oct-21 Commercial Mortgage Pass-Through Certificates, Series 2015-VFM, Class C Confirmed AA (sf) Neg CA
08-Oct-21 Commercial Mortgage Pass-Through Certificates, Series 2015-VFM, Class D Confirmed A (sf) Neg CA
08-Oct-21 Commercial Mortgage Pass-Through Certificates, Series 2015-VFM, Class E Confirmed BBB (sf) Neg CA
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