Morningstar DBRS Downgrades the Credit Rating on One Class of of COMM 2015-LC19 Mortgage Trust, Confirms All Remaining Credit Ratings

DBRS, Inc. (Morningstar DBRS) downgraded the credit rating on one class of Commercial Mortgage Pass-Through Certificates, Series 2015-LC19 issued by COMM 2015-LC19 Mortgage Trust as follows:

-- Class G to CCC (sf) from B (low) (sf)

In addition, Morningstar DBRS confirmed the following credit ratings:

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

Morningstar DBRS changed the trends of Classes E and F to Stable from Negative. There is no trend for Class G, which has a credit rating that does not typically carry trends in commercial mortgage-backed securities (CMBS). The trends on the remaining classes are Stable.

The credit rating downgrade reflects Morningstar DBRS' recoverability expectations for the remaining loans in the pool. Since the last credit rating action in July 2024, 43 loans have repaid from the pool, leaving seven loans, of which three, representing 37.4% of the pool, are in special servicing. Overall, the transaction has paid down by 75.4% since issuance. As the pool continues to wind down, Morningstar DBRS looked to a recoverability analysis, the results of which suggest that losses would significantly erode the unrated Class H, leaving the rated Class G susceptible to losses should loan performance across the remaining loan continues to worsen. Morningstar DBRS concluded that the senior classes continue to be insulated from losses, the primary consideration in the confirmation of Class A-M through Class F. 

Given the concentration of defaulted loans remaining, Morningstar DBRS' analysis considered conservative liquidation scenarios for all three loans in special servicing, based on stresses to the most recent appraised values to determine the recoverability of the outstanding bonds. The analysis resulted in cumulative implied losses of approximately $19.0 million, contained to the unrated Class H, which has a current balance of $39.6 million. The largest loan in special servicing, Central Plaza (Prospectus ID#4, 22.9% of the pool), is secured by the borrower's fee-simple interest in four Class B office buildings, totaling 880,035 square feet (sf) in Los Angeles. The loan transferred to special servicing in December 2024 for maturity default. The property continues to experience leasing challenges as occupancy decreased to 48.2% as of the March 2025 appraisal, down from 64.2% at issuance. The leasing challenges are exacerbated by soft submarket conditions as according to Reis, the Mid-Wilshire submarket reported an elevated vacancy rate of 22.7% as of Q1 2025. Despite the decrease in occupancy, the property's annualized net cash flow (NCF) based on the trailing 11-month period ended November 30, 2024, was $8.7 million (reflecting a debt service coverage ratio (DSCR) of 1.53 times (x)), up over the YE2023 NCF of $8.0 million and issuance NCF of $8.3 million. An updated appraisal completed in March 2025 valued the property at $109.0 million, down 22.9% from the issuance appraisal of $141.3 million. Given the depressed value and lack of leasing activity, Morningstar DBRS analyzed this loan with a liquidation scenario, resulting in a loss severity of 4.0%.

The second largest loan in special servicing, Decorative Center of Houston, is secured by a 514,000 sf mixed-use property comprising primarily office and unique showroom space in Houston. The loan transferred to special servicing in January 2025 for maturity default. While occupancy is relatively unchanged when compared with the prior year's reporting, occupancy has been in decline over the last several years, decreasing to 59.4% as of the March 2025 appraisal from 65% at YE2022 and 70% at YE2020. While the tenant roster is fairly granular, two of the property's five largest tenants, representing 5.1% net rentable area, have scheduled lease expirations by June 2026. An updated appraisal was completed in March 2025 valued the property at $43.3 million, a 44.3% decline from the issuance appraised value of $77.8 million. Morningstar DBRS' analysis included a liquidation scenario based on a 20% haircut to the March 2025 appraised value to reflect the declining occupancy and weak submarket fundamentals, resulting in an increased projected loss severity of approximately 31.0%.

The pool's largest loan, 9911 Belward Campus Drive (Prospectus ID#3, 28.1% of the pool), is being monitored on the servicer's watchlist as the loan reached is anticipated repayment date in January 2025. The three remaining loans are currently performing with none of the loans reporting a 2024 DSCR of less than 1.51x.

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 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 factor(s) 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.
 
Classes X-A, X-B, and X-C are interest-only (IO) certificates that reference 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 credit ratings were initiated at the request of the rated entity.

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

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

These are solicited credit ratings.

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. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The Morningstar DBRS Long-Term Obligation Rating Scale definition indicates that credit ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

DBRS, Inc.
22 West Washington Street
Chicago, IL 60602 USA
Tel. +1 312 332-3429

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

-- North American CMBS Multi-Borrower Rating Methodology (April 9, 2025)/North American CMBS Insight Model v 1.3.0.0, https://dbrs.morningstar.com/research/451739
-- 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

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