DBRS Morningstar Confirmed All Classes of SBALR Commercial Mortgage 2020-RR1 Trust

DBRS, Inc. (DBRS Morningstar) confirmed all ratings on the Commercial Mortgage Pass-Through Certificates, Series 2020-RR1 issued by SBALR Commercial Mortgage 2020-RR1 Trust as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-AB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (low) (sf)
-- Class X-B at A (sf)
-- Class C at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (low) (sf)
-- Class F at B (low) (sf)

DBRS Morningstar removed classes E and F from Under Review with Negative Implications, where it placed them on August 6, 2020. All trends are Stable.

As of the January 2021 remittance, the pool had a nominal 0.5% reduction of collateral because of amortization as all of the original 59 loans remain in the pool. There are two loans, representing 4.7% of the pool, with the special servicer. The larger of these is the Clarion Suites Anchorage loan (Prospectus ID#4, 3.5% of the pool), which is secured by a 112-room limited-service hotel in Alaska. The loan transferred to the special servicer in October 2020 because of a Coronavirus Disease (COVID-19) relief request, and the lender subsequently amended the loan to convert principal and interest (P&I) payments to interest only for one year ending in April 2021. The loan’s amortization schedule will then be recast, and P&I payments will resume in May 2021. Additionally, the Wingate Arlington Heights loan (Prospectus ID#31, 1.2% of the pool) transferred to special servicing in June 2020 also because of pandemic-related performance concerns. The loan is secured by an 80-room hotel in Arlington Heights, Illinois, which is about 10 miles northwest of O’Hare International Airport. The loan fell delinquent in April 2020, and the servicer’s commentary notes that the borrower is working through a consultant to negotiate a modification agreement, which could include some form of forbearance.

There are seven loans, representing 10.8% of the pool, on the servicer’s watchlist. The servicer is monitoring these loans for various reasons including low debt service coverage ratio or occupancy, tenant rollover risk, and/or pandemic-related forbearance requests. Three of the watchlist loans, collectively representing 4.7% of the pool balance, have been modified with some form of temporary forbearance agreement or loan amendments to allow reserves to be used for debt service obligations.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

DBRS Morningstar materially deviated from its North American CMBS Insight Model when determining the ratings assigned to Classes B and C, as the quantitative results suggested higher ratings on the classes. The material deviations are warranted given the uncertain loan-level event risk with the loans in special servicing and on the servicer’s watchlist, in addition to the increased concentration of the pool in terms of the number of loans remaining.

Classes X-A and X-B 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#4 – Clarion Suites Anchorage (3.5% 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 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 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.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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