Fitch Ratings has affirmed five classes of DBCG 2017-BBG Mortgage Trust Commercial Mortgage Pass-Through Certificates.

RATING ACTIONS

Entity / Debt

Rating

Prior

DBCG 2017-BBG

A 233062AA6

LT

AAAsf

Affirmed

AAAsf

B 233062AG3

LT

AAAsf

Affirmed

AAAsf

C 233062AJ7

LT

AA+sf

Affirmed

AA+sf

HRR 233062AM0

LT

AAsf

Affirmed

AAsf

X-EXT 233062AE8

LT

AAAsf

Affirmed

AAAsf

Page

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VIEW ADDITIONAL RATING DETAILS

KEY RATING DRIVERS

Sustained High Occupancy and Improved Cash Flow Since Issuance: The affirmations reflect improved cash flow and stable occupancy since issuance and stable performance since Fitch's last rating action. Property occupancy has remained near 100% at 99.2% as of September 2022, compared with 97.8% at issuance.

Fitch's stressed net cash flow (NCF) remains stable since Fitch's last rating action at approximately $62 million compared to $57.0 million at issuance. The improvement over issuance is largely due to growth in rental revenues from contractual rent steps. Average in-place base rents as of the September 2022 rent roll have increased to approximately $79 psf from roughly $71 psf at issuance. Fitch's stressed NCF has benefitted from this top line rent growth because increases in operating expenses are mostly passed through to the primary tenant given its net lease structure.

The $500 million mortgage loan has a Fitch stressed debt service coverage ratio and loan-to-value ratio of 1.50x and 58.7%, respectively, with debt of $550 psf based on the collateral NRA; this represents an improvement from 1.38x and 63.6% at issuance.

High-Quality Asset in Strong Location: The collateral for the loan consists of class A office space within a larger mixed-use tower that has exceptional design and build quality and encompasses the entire city block along Lexington Avenue between 58th and 59th Streets in the Plaza submarket of Midtown Manhattan. Fitch assigned a property quality grade of 'A' at issuance.

Single Tenant Concentration: The property is 97.8% occupied by Bloomberg, which uses this location as its global headquarters. Bloomberg's lease runs through February 2029; more than eight years past the initial loan maturity date and two years beyond the loan's fully extended maturity date. The tenant has one, 10-year renewal option remaining and no early termination options.

Institutional Sponsorship: The property is 100% owned by Alexander's Inc. (NYSE: ALX), a publicly traded real estate investment trust that is controlled by Vornado Realty Trust (VNO; BBB-).

Full Interest Only: The loan requires interest-only payments for the entire three-year initial loan term, plus the extension periods. Despite downside risk associated with the lack of amortization against potential future value declines, the current loan basis of $550 psf is well supported by Fitch's stressed value of approximately $950 psf, as well as Fitch's estimated dark value of $630 psf.

The loan had an initial loan maturity in June 2020. The borrower had previously exercised the first, second and third of its four one-year extension options to June 2023. Per the servicer, the borrower has not yet provided formal notice to exercise the fourth and final of its one-year extension options; notice is required in May 2023 if the borrower elects to extend.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to negative rating action/downgrade:

Sustained and significant decline in asset occupancy and/or a material deterioration in property NCF. Due to the long-term nature of the primary tenant's lease, this scenario is not expected unless expenses grow significantly.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

For classes B, C, HRR and X-EXT a sustained high occupancy and further improvements in cash flow and/or with a full defeasance of the loan.

Best/Worst Case Rating Scenario

International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.

USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10

Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg

Additional information is available on www.fitchratings.com

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