Wells Fargo Commercial Mortgage Trust 2017-RC1 Ratings Affirmed On 16 Classes

  • We affirmed our ratings on 16 classes from Wells Fargo Commercial Mortgage Trust 2017-RC1, a U.S. CMBS transaction.
  • The affirmations reflect our analysis of the transaction, which included a review of the credit characteristics and performance of the remaining assets in the pool, the transaction's structure, and the liquidity available to the trust.
  • While COVID-19 will likely have an accelerated effect on performance declines for certain properties, especially with retail and lodging exposure, today's rating actions do not specifically address the outbreak of the virus.
CENTENNIAL (S&P Global Ratings) March 25, 2020--S&P Global Ratings today affirmed its ratings on 16 classes of commercial mortgage pass-through certificates from Wells Fargo Commercial Mortgage Trust 2017-RC1, a U.S. CMBS transaction, as follows:
  • Class A-1: AAA (sf)
  • Class A-2: AAA (sf)
  • Class A-3: AAA (sf)
  • Class A-4: AAA (sf)
  • Class A-SB: AAA (sf)
  • Class A-S: AAA (sf)
  • Class B: AA (sf)
  • Class C: A (sf)
  • Class D: BBB- (sf)
  • Class E: BB- (sf)
  • Class F: B+ (sf)
  • Class X-A: AAA (sf)
  • Class X-B: A (sf)
  • Class X-D: BBB- (sf)
  • Class X-E: BB- (sf)
  • Class X-F: B+ (sf)
For the affirmations, our expectation of credit enhancement was in line with the affirmed rating levels.
We affirmed our ratings on the class X-A, X-B, X-D, X-E and X-F interest-only (IO) certificates based on our criteria for rating IO securities, in which the ratings on the IO securities would not be higher than that of the lowest rated reference class. For example, the class X-A certificates' notional amount will be equal to the aggregate certificate balance of the class A-1, A-2, A-3, A-4, and A-SB certificates.
S&P Global Ratings acknowledges a high degree of uncertainty about the rate of spread and peak of the coronavirus outbreak. Some government authorities estimate the pandemic will peak around midyear, and we are using this assumption in assessing the economic and credit implications. In our view, the measures adopted to contain COVID-19 have pushed the global economy into recession (see our macroeconomic and credit updates here: www.spglobal.com/ratings). As the situation evolves, we will update our assumptions and estimates accordingly.
TRANSACTION SUMMARY
As of the March 16, 2020, trustee remittance report, the collateral pool balance was $605.8 million, which is 96.9% of the pool balance at issuance. The pool currently includes 58 loans, of which 15 loans are backed by cooperative housing properties ($47.1 million, 7.8%), down from 60 loans at issuance. Twelve of these loans ($97.1 million, 16.0%) are on the master servicer's watchlist and one ($9.4 million, 1.5%) is defeased. The largest loan on the master servicer's watchlist is the Hyatt Place Portfolio ($54.2 million, 9.0%). The loan appears on the watchlist due to a decline in reported debt service coverage (DSC). The reported DSC as of September 2019 was 1.15x, down from an underwritten DSC of 1.77x at issuance. The loan is secured by six limited servicer hotels located in six states, totaling 754 rooms.
We calculated a 1.99x S&P Global Ratings weighted average DSC and 84.3% S&P Global Ratings weighted average loan-to-value (LTV) ratio, using a 8.05% S&P Global Ratings weighted average capitalization rate. The DSC, LTV, and capitalization rate calculations exclude the defeased loan. The top 10 loans have an aggregate outstanding pool trust balance of $320.9 million (53.0%). Using adjusted servicer-reported numbers, we calculated an S&P Global Ratings weighted average DSC and LTV of 1.65x and 93.0%, respectively, for the top 10 loans.
To date, the transaction has not experienced any principal losses.
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