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DBRS Morningstar Confirms Ratings on Banc of America Merrill Lynch Commercial Mortgage Trust 2015-UBS7

12/01/2020 | 05:06am EST

DBRS Limited (DBRS Morningstar) confirmed the ratings of the Commercial Mortgage Pass-Through Certificates, Series 2015-UBS7 issued by Banc of America Merrill Lynch Commercial Mortgage Trust 2015-UBS7 as follows.

Class A-3 at AAA (sf)

Class A-4 at AAA (sf)

Class A-SB at AAA (sf)

Class A-S at AAA (sf)

Class X-A at AAA (sf)

Class X-B at AAA (sf)

Class B at AA (low) (sf)

Class C at A (low) (sf)

Class X-D at BBB (sf)

Class D at BBB (low) (sf)

Class X-E at B (sf)

Class E at B (low) (sf)

Class X-FG at B (low) (sf)

Class F at CCC (sf)

Class G at CCC (sf)

Classes F, G, and X-FG were removed from Under Review with Negative Implications, where they were placed on August 6, 2020. Class X-FG now has a Negative trend. Classes F and G have ratings that do not carry trends. DBRS Morningstar changed the trends for Classes D, E, X-D, and X-E to Negative from Stable. All other trends are Stable. DBRS Morningstar continues the Interest in Arrears designation for Class E.

The Negative trends on Classes D, E, X-D, X-E, and X-FG reflect the continued performance challenges for the underlying collateral, much of which has been driven by the impacts of the Coronavirus Disease (COVID-19) global pandemic. In addition to the four loans representing 20.7% of the pool in special servicing as of the November 2020 remittance, DBRS Morningstar notes that the pool has a high concentration of hospitality properties, representing 17.2% of the pool. Hospitality properties have been the most severely affected by the initial effects of the coronavirus pandemic and, as such, the high concentration suggests increased risks for the pool, particularly for the lower rating categories, since issuance.

In addition, the transaction has a higher concentration of retail property types, with 10 loans secured by regional malls and both anchored and unanchored retail properties, collectively representing 20.0% of the pool. Office collateral makes up the largest concentration of one property type, with four loans comprising 25.2% of the current trust balance.

The four loans in special servicing are West Hotel at the Domain (Prospectus ID#3; 8.9% of the pool), The Mall of New Hampshire (Prospectus ID#5; 7.0% of the pool), WPC Department Store Portfolio (Prospectus ID#12; 2.8% of the pool), and Southeast Retail Portfolio (Prospectus ID#18; 2.0% of the pool).

The largest loan in special servicing, The Mall of New Hampshire, is secured by a Class B single-level enclosed regional mall totalling 811,573 square feet (sf), of which 405,723 sf is part of the collateral. Simon Property Group owns and operates the property. At issuance, the largest tenants were the noncollateral Macy's, Sears, and JCPenney. The Sears was closed in 2018 and later backfilled by Dick's Sporting Goods and Dave & Buster's. The loan transferred to special servicing in May 2020 at the borrower's request, who cited imminent monetary default because of coronavirus pandemic-driven difficulties.

The borrower last paid debt service in March 2020. An October 2020 appraisal obtained by the special servicer indicated an as-is value of $243.5 million, a relatively minor -4.9% variance from the issuance valuation of $256.0 million, with an implied loan-to-value ratio of 61.6%. Financial performance had shown signs of declining prior to the pandemic when cash flows continued to trend downward. The 2019 year-end net cash flow (NCF) decreased 8.8% compared with the 2018 NCF and was down 21.6% from the issuer's NCF. Although the October 2020 appraisal suggests only a small value decline from issuance, DBRS Morningstar believes that valuation may be aggressive and notes the significantly increased risks in the extended delinquency and the collateral mall's exposure to struggling retailers including JCPenney and Macy's as well as Dave & Buster's, which has been particularly challenged amid the social-distancing impacts of the pandemic. Given these factors, as well as the decline in performance prior to the pandemic, DBRS Morningstar applied a stressed probability of default for this loan in the analysis for this review, significantly increasing the expected loss.

As of the November 2020 remittance, 41 of the original 42 loans remain in the pool, representing a collateral reduction of 5.9% since issuance. Three loans, representing 1.2% of the current pool balance, are fully defeased. Additionally, there are 10 loans, representing 27.4% of the current trust balance, on the servicer's watchlist per the November 2020 remittance. These loans are being monitored for a variety of reasons including low debt service coverage ratio (DSCR) and occupancy issues; however, the primary reason for the increase of loans on the watchlist is for hospitality and retail properties with a low DSCR stemming from disruptions related to the coronavirus pandemic.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

Classes X-A, X-B, X-D, X-E, and X-FG 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 ratings are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by DBRS Morningstar.

DBRS Morningstar provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

Prospectus ID#5-The Mall of New Hampshire (7.0% of the pool)

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.

Notes:

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

The principal methodology is North American CMBS Surveillance Methodology (March 6, 2020), 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.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.

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@dbrsmorningstar.com.

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. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The DBRS Morningstar long-term rating scale definition indicates that 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

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 info@dbrsmorningstar.com.

DBRS Limited

DBRS Tower, 181 University Avenue, Suite 700

Toronto, ON M5H 3M7 Canada

Tel. +1 416 593-5577

Ratings

Date Issued	Debt Rated	Action	Rating	Trend	Issued

i

US = USA Issued, NRSRO

CA = Canada Issued, NRSRO

EU = EU Issued, NRSRO

E = EU endorsed

Unsolicited Participating With Access

Unsolicited Participating Without Access

Unsolicited Non-Participating

30-Nov-20	Commercial Mortgage Pass-Through Certificates, Series 2015-UBS7, Class A-3	Confirmed	AAA (sf)	Stb	CA
30-Nov-20	Commercial Mortgage Pass-Through Certificates, Series 2015-UBS7, Class A-4	Confirmed	AAA (sf)	Stb	CA
30-Nov-20	Commercial Mortgage Pass-Through Certificates, Series 2015-UBS7, Class A-S	Confirmed	AAA (sf)	Stb	CA
30-Nov-20	Commercial Mortgage Pass-Through Certificates, Series 2015-UBS7, Class A-SB	Confirmed	AAA (sf)	Stb	CA
30-Nov-20	Commercial Mortgage Pass-Through Certificates, Series 2015-UBS7, Class X-A	Confirmed	AAA (sf)	Stb	CA
30-Nov-20	Commercial Mortgage Pass-Through Certificates, Series 2015-UBS7, Class X-B	Confirmed	AAA (sf)	Stb	CA
30-Nov-20	Commercial Mortgage Pass-Through Certificates, Series 2015-UBS7, Class B	Confirmed	AA (low) (sf)	Stb	CA
30-Nov-20	Commercial Mortgage Pass-Through Certificates, Series 2015-UBS7, Class C	Confirmed	A (low) (sf)	Stb	CA
30-Nov-20	Commercial Mortgage Pass-Through Certificates, Series 2015-UBS7, Class X-D	Trend Change	BBB (sf)	Neg	CA
30-Nov-20	Commercial Mortgage Pass-Through Certificates, Series 2015-UBS7, Class D	Trend Change	BBB (low) (sf)	Neg	CA
30-Nov-20	Commercial Mortgage Pass-Through Certificates, Series 2015-UBS7, Class X-E	Trend Change	B (sf)	Neg	CA
30-Nov-20	Commercial Mortgage Pass-Through Certificates, Series 2015-UBS7, Class E	Int. in Arrears	B (low) (sf)	Neg	CA
30-Nov-20	Commercial Mortgage Pass-Through Certificates, Series 2015-UBS7, Class E	Trend Change	B (low) (sf)	Neg	CA
04-Nov-20	Commercial Mortgage Pass-Through Certificates, Series 2015-UBS7, Class E	Int. in Arrears	B (low) (sf)	Stb	US
30-Nov-20	Commercial Mortgage Pass-Through Certificates, Series 2015-UBS7, Class X-FG	Confirmed	B (low) (sf)	Neg	CA
30-Nov-20	Commercial Mortgage Pass-Through Certificates, Series 2015-UBS7, Class F	Confirmed	CCC (sf)	--	CA
30-Nov-20	Commercial Mortgage Pass-Through Certificates, Series 2015-UBS7, Class G	Confirmed	CCC (sf)	--	CA

ALL DBRS RATINGS ARE SUBJECT TO DISCLAIMERS AND CERTAIN LIMITATIONS. PLEASE READ THESE DISCLAIMERS AND LIMITATIONS AND ADDITIONAL INFORMATION REGARDING DBRS RATINGS, INCLUDING DEFINITIONS, POLICIES, RATING SCALES AND METHODOLOGIES.

(C) 2020 Electronic News Publishing, source ENP Newswire

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