Fitch Ratings has affirmed all ratings and revised two Outlooks to Stable from Negative of BANK 2018-BNK10 Commercial Mortgage Pass-Through Certificates, Series 2018-BNK10.

RATING ACTIONS

Entity / Debt

Rating

Prior

BANK 2018-BNK10

A-1 065404AW5

LT

AAAsf

Affirmed

AAAsf

A-2 065404AX3

LT

AAAsf

Affirmed

AAAsf

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

Page

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VIEW ADDITIONAL RATING DETAILS

KEY RATING DRIVERS

Improved Loss Expectations: Fitch's loss expectations for the pool have improved since the prior rating action. The Outlook revision on class E (and interest only class X-E) reflects better than expected 2020 performance on some of the Fitch Loans of Concern (FLOCs) and higher recovery expectations on the specially serviced loans. Fitch's current ratings reflect a base case loss of 4.25%. Losses are marginally higher when factoring additional coronavirus-related stresses and an outsized loss on the Warwick Mall loan (2.2%).

Fitch has designated 10 FLOCs (22.9% of pool), including three (1%) specially serviced loans. However, all of the specially serviced loans are current and expected to return to the master servicer.

The largest driver to expected losses is the Warwick Mall, which is secured by an approximately 588,000-sf portion of a regional mall located in Warwick, RI. Non-collateral anchors include Macy's and Target. The property was 94% occupied as of the June 2021 rent roll. The mall reopened in June 2020 after closing in March due to the pandemic. The YE 2020 servicer-reported NOI was 14% below YE 2019.

Major collateral tenants include JCPenney (23.4% NRA, lease expiry in March 2030), Jordan's Furniture (19.3%, December 2026), Nordstrom Rack (6.4%, November 2022) and Old Navy (3.8%, January 2026). Jordan Furniture recently extended its lease for five years through December 2026. The prior theater, Showcase Cinema (9.7%), did not renew and vacated at its April 2021 lease expiration; however, the borrower has executed a 15-year lease with a new theater tenant, Apple Cinemas, which was expected to begin around Nov. 1, 2021.

Fitch's base case loss of 21% reflects a 20% cap rate to the YE 2020 NOI. Fitch ran an additional sensitivity that applied an outsized loss of 30%, which equates to a 25% cap rate and 15% haircut to the YE 2020 NOI, to account for refinance concerns, the secondary market location, non-institutional sponsorship, as well as the potential protracted impact of the pandemic. The sensitivity loss on this regional mall was lowered to 30% from 40% at the last rating action due to the positive leasing momentum; this contributed to the Outlook revisions of classes E and X-E to Stable from Negative.

The largest FLOC is the Wisconsin Hotel Portfolio (5.5%), which is secured by a 11-property, 1,255-key hotel portfolio located in five different submarkets in Wisconsin. Property performance has suffered from hardships related to the pandemic, but the borrower remains current on payments. NOI debt service coverage ratio (DSCR) has decreased to 0.61x as of June 2021 from -0.12x at YE 2020, 1.63x at YE 2019, and 1.74x at YE 2018. Portfolio occupancy as of June 2021 was reported to be 36%, down from 64% at YE 2019. Fitch's base case loss of approximately 1% incorporates a 10% haircut applied to the portfolio's YE 2019 NOI to reflect hotel performance volatility. Fitch ran an additional sensitivity that applies a loss of 15%, which is based on a 26% haircut to the YE 2019 NOI to reflect significant performance concerns related to the pandemic.

Minimal Change to Credit Enhancement: As of the November 2021 distribution date, the pool's aggregate balance has been paid down by 2.5% to $1.25 billion from $1.29 billion at issuance. 67 of the original 68 loans remain in the pool; two loans (0.5%) are defeased. Twenty-four loans representing 54.9% of the pool are full-term interest-only loans, and six loans representing 12.3% of the pool remain in their partial interest-only period. The pool is scheduled to amortize by 7.4% of the initial pool balance by maturity.

Alternative Loss Consideration; Coronavirus Exposure: Six loans (13.6%) are secured by hotel properties and 16 loans (23.3%) are secured by retail properties. Fitch's sensitivity analysis applied an additional stress to the pre-pandemic cash flows for two hotel loans given the significant 2020 NOI declines related to the pandemic; despite these additional stresses combined with the outsized loss of 30% on the Warwick Mall loan, the Outlooks for classes E and X-E are revised to Stable from Negative due to sufficient credit enhancement and better than expected performance of loans that were impacted by the pandemic.

Investment-Grade Credit Opinion Loans: At issuance, two loans had investment-grade credit opinions. Apple Campus 3 (7.5% of the pool) received a credit opinion of 'BBB-sf' on a standalone basis. Moffett Towers II - Building 2 (3.3% of the pool) received a credit opinion of 'BBB-sf' on a standalone basis.

RATING SENSITIVITIES

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

Downgrades would occur with an increase in pool-level losses from underperforming or specially serviced loans. Downgrades to the senior A-1, A-2, A-3, A-4, A-5 A-SB and A-S classes, along with class B, are not expected given their sufficient CE relative to expected losses and continued amortization, but may occur if interest shortfalls occur or loss expectations increase considerably. Downgrades to classes C, X-B, D, and X-D are possible should additional defaults occur or loss expectations increase.

Downgrades to classes E and X-E would occur should loss expectations increase from continued performance decline of the FLOCs, loans susceptible to the pandemic not stabilize, additional loans default or transfer to special servicing, higher losses than expected are incurred on the specially serviced loans and/or with an outsized loss on the Warwick Mall loan.

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

Upgrades would occur with stable to improved asset performance, particularly on the FLOCs, coupled with additional paydown and/or defeasance.

Upgrades to classes B, C and X-B would only occur with significant improvement in CE, defeasance and/or performance stabilization of FLOCs and other properties affected by the coronavirus pandemic. Classes would not be upgraded above 'Asf' if there were likelihood of interest shortfalls.

Upgrades to classes D, X-D, E and X-E may occur as the number of FLOCs are reduced, properties vulnerable to the pandemic return to pre-pandemic levels and there is sufficient CE to the classes.

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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