Fitch Ratings has affirmed 13 classes of BANK 2018-BNK10 Commercial Mortgage Pass-Through Certificates, Series 2018-BNK10.
RATING ACTIONS
Entity / Debt
Rating
Prior
BANK 2018-BNK10
A-3 065404AY1
LT
AAAsf
Affirmed
AAAsf
A-4 065404BA2
LT
AAAsf
Affirmed
AAAsf
A-5 065404BB0
LT
AAAsf
Affirmed
AAAsf
A-S 065404BC8
LT
AAAsf
Affirmed
AAAsf
A-SB 065404AZ8
LT
AAAsf
Affirmed
AAAsf
B 065404BD6
LT
AA-sf
Affirmed
AA-sf
C 065404BE4
LT
A-sf
Affirmed
A-sf
D 065404AA3
LT
BBB-sf
Affirmed
BBB-sf
E 065404AC9
LT
BB-sf
Affirmed
BB-sf
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VIEW ADDITIONAL RATING DETAILS
KEY RATING DRIVERS
Overall Stable Performance and Loss Expectations: Overall pool performance has remained relatively stable since Fitch's prior rating action. The majority of loans previously affected by the pandemic have stabilized. Fitch has identified five Fitch Loans of Concern (FLOCs; 7.8% of the pool balance) primarily due to deteriorating performance and upcoming rollover concerns. No loans are in special servicing. Fitch's current ratings incorporate a base case loss of 3.8%.
The largest contributor to loss expectations,
Recent tenant sales were requested from the master servicer, but not provided; the latest available inline sales were
The second largest contributor to loss expectations and largest increase in loss since Fitch's prior rating action is the One Newark Center loan (2.7%), secured by a portion of a 418,000-sf office property located in the Newark CBD. The loan's collateral consists of floors 6-22 of an office building and an attached parking garage. Floors 1-5 are owned and occupied by
Occupancy declined to 68% as of
The loan has remained current, however NOI DSCR is low reporting at 1.07x as of YTD
The third largest contributor to loss expectations,
Minimal Change to Credit Enhancement (CE): As of the
Property Type Concentration: The highest concentration is office (25.4%), followed by retail (22.6%), self-storage (21.8%), hotel (13.4%) and multi-family (7.6%).
Pari Passu Loans: Eight loans (29.4% of pool) are pari passu.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Sensitivity factors that could lead to downgrades include an increase in pool-level losses from underperforming loans/assets.
Downgrades to 'AAAsf' and 'AA-sf' are not likely due to the continued expected amortization, position in the capital structure and sufficient CE relative to loss expectations, but may occur should interest shortfalls affect these classes.
Downgrades to 'A-sf' and 'BBB-sf' would occur should expected losses for the pool increase substantially, with continued underperformance of the FLOCs and/or the transfer of loans to special servicing.
Downgrades to 'BB-sf' would occur should loss expectations increase as FLOC performance declines or fails to stabilize.
Fitch has identified both a baseline and a worse-than-expected, adverse stagflation scenario based on fallout from the
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Sensitivity factors that could lead to upgrades include stable to improved asset performance, coupled with additional paydown and/or defeasance.
Upgrades to classes B, C and X-B may occur with significant improvement in CE and/or defeasance, and with the stabilization of performance on the FLOCs; however, adverse selection and increased concentrations could cause this trend to reverse. The class would not be upgraded above 'Asf' if there were any likelihood of interest shortfalls.
Upgrades to classes D, X-D, E and X-E are not likely until the later years in the transaction and only if the performance of the remaining pool is stable and/or there is sufficient CE to the bonds.
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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