Morningstar DBRS Confirms Credit Ratings on All Classes of DBWF 2015-LCM Mortgage Trust

DBRS Limited (Morningstar DBRS) confirmed its credit ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2015-LCM issued by DBWF 2015-LCM Mortgage Trust as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (high) (sf)
-- Class C at A (high) (sf)
-- Class D at BBB (high) (sf)
-- Class E at BB (low) (sf)
-- Class F at BB (low) (sf)

All trends are Stable.

The credit rating confirmations reflect the overall stable performance of the underlying mall, which benefits from a nontraditional anchor and major tenant mix that includes Macy's, Costco Wholesale, JCPenney, Target, and The Home Depot. The mall is in a densely populated and well-trafficked area of Los Angeles, with several other big-box and commercial developments in the surrounding area. The consistent performance of the collateral mall is evidenced by occupancy rates, tenant sales, and cash flows that are in line with Morningstar DBRS' expectations since the previous credit rating action in June 2024.

The collateral for the underlying loan consists of the fee-simple and leasehold interests in the 2.1 million-square-foot (sf) Lakewood Center mall in Lakewood, California, located approximately 10 miles north of Long Beach. At issuance, the whole loan of $410.0 million consisted of $240.0 million of senior debt and $170.0 million of junior debt. The subject transaction is backed by $120.0 million of the senior debt and the entirety of the junior debt. The remaining $120.0 million of senior debt is secured in the Morningstar DBRS-rated COMM 2015-CCRE24 Mortgage Trust transaction. The trust loan has an 11-year term and amortizes over a 30-year schedule, maturing in June 2026. Morningstar DBRS estimates a negligible refinance gap, which, in combination with the continued stable performance, suggests minimal maturity risk. As of the May 2025 remittance, the trust debt had amortized by 15.6% with a current trust balance of $244.9 million. The loan sponsor, Macerich Company, retains 60.0% ownership of the property following the sale of a 40.0% minority interest to Singapore's sovereign wealth fund, Government of Singapore Investment Corporation, in 2015.

As per the December 2024 rent roll, the property was 94.8% occupied, a marginal decrease from the March 2024 figure of 95.0% but an improvement over the December 2022 figure of 91.2%. The largest tenants include Macy's (17.5% of the net rentable area (NRA), lease expires in June 2030), Costco (8.0% of the NRA, lease expires in February 2029), JCPenney (7.8% of the NRA, lease expires in May 2025), and Target (7.7% of the NRA, lease expires in June 2035). Tenant rollover risk is notable, with approximately 20.7% of the NRA having leases scheduled to expire in the next 12 months, including JCPenney and Starlight Cinemas (4.4% of the NRA, lease expires May 2025). Morningstar DBRS has requested an update on JCPenney and Starlight Cinemas' plans upon their lease expirations but has not received a response as of this commentary. One of the larger tenants, Forever 21 (3.9% of the NRA, lease expired in January 2025), appears to have vacated as part of a countrywide closure of all their stores following the company's second bankruptcy filing. As per Reis, the Long Beach/Cerritos/Carson retail submarket has an average vacancy of 8.2% as of Q1 2025, supporting strong leasing activity and making it notably easier to backfill vacant space relative to submarkets with softer fundamentals.

According to the tenant sales report for the trailing 12-month (T-12) period ended December 31, 2024, total mall sales were $435.51 per square foot (psf), an increase from the T-12 period ended March 31, 2024, figure of $433.01 psf. In-line tenants reported sales of $552.82 psf compared with $535.04 psf for the T-12 periods ended December 31, 2024, and March 31, 2024, respectively. Department stores, however, reported a marginal decrease with sales of $161.91 psf for the T-12 period ended December 31, 2024, compared with $165.87 psf for the T-12 period ended March 31, 2024. Starlight Cinemas reported total sales of approximately $1.4 million, equating to $86,100 per screen, compared with $53,100 at YE2023; however, the tenant took occupancy only toward the end of July 2023.

The YE2024 net cash flow (NCF) was reported at $29.1 million, a small decrease from the YE2023 NCF of $29.2 million and slightly above the YE2022 figure of $28.7 million. For those same periods, the subject reported a debt service coverage ratio (DSCR) of 1.33 times (x), 1.33x, and 1.31x, respectively.

Morningstar DBRS maintained the analysis from last review, which includes a Morningstar DBRS Value of $363.0 million based on a Morningstar DBRS NCF of $28.1 million, derived from a 2.0% haircut to the YE2022 NCF, and a Morningstar DBRS capitalization rate of 7.75%. The $363.0 million value implies an 88.1% loan-to-value ratio (LTV) on the $319.8 million remaining whole loan balance. Morningstar DBRS maintained positive qualitative adjustments totaling 2.5% to the LTV sizing benchmarks to account for the ongoing amortization and the desirable location within the Los Angeles market.

Morningstar DBRS' credit ratings on the applicable classes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transactions' respective press releases at issuance.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt credit rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS   
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (May 16, 2025): https://dbrs.morningstar.com/research/454196

Class X-A is an interest-only (IO) certificate that references a single rated tranche or 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 credit ratings are subject to surveillance, which could result in credit ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by Morningstar DBRS.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is North American CMBS Surveillance Methodology (February 28, 2025): https://dbrs.morningstar.com/research/448963

Other methodologies referenced in this transaction are listed at the end of this press release.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info-DBRS@morningstar.com.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

DBRS Limited
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Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

-- North American Single-Asset/Single-Borrower Ratings Methodology (February 28, 2025): https://dbrs.morningstar.com/research/448962

-- Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (September 19, 2024): https://dbrs.morningstar.com/research/439702

-- Legal Criteria for U.S. Structured Finance (December 3, 2024): https://dbrs.morningstar.com/research/444064

-- North American Commercial Mortgage Servicer Rankings (August 23, 2024): https://dbrs.morningstar.com/research/438283

A description of how Morningstar DBRS analyzes structured finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/417279. (July 17, 2023)

For more information on this credit or on this industry, visit https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.