DBRS Morningstar Confirms All Ratings on BBCMS Mortgage Trust 2020-C6

DBRS Limited (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass-Through Certificates, Series 2020-C6 issued by BBCMS Mortgage Trust 2020-C6 as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-S at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (high) (sf)
-- Class X-B at A (high) (sf)
-- Class C at A (sf)
-- Class D at A (low) (sf)
-- Class X-D at BBB (high) (sf)
-- Class E at BBB (sf)
-- Class F-RR at BBB (low) (sf)
-- Class G-RR at BB (sf)
-- Class H-RR at B (high) (sf)
-- Class J-RR at B (low) (sf)

DBRS Morningstar also confirmed its ratings on the loan-specific certificates as follows:

-- Class F5T-A at A (low) (sf)
-- Class F5T-B at BBB (low) (sf)
-- Class F5T-C at BB (low) (sf)
-- Class F5T-D at B (low) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the underlying loans in the transaction. At issuance, the trust consisted of 45 fixed-rate loans secured by 118 commercial, hospitality, and multifamily properties with an original balance of $1.02 billion. As of the January 2021 remittance report, all of the original loans remain in the pool and there has been nominal collateral reduction of 0.1% since issuance. Amortization has generally been limited, as 25 of the loans, representing 69.9% of the current pool balance, are structured as interest only (IO) and 18 loans, representing another 27.4%, are structured as partial IO and remain in their IO periods.

The collateral pool’s property type concentration is relatively diverse, with the highest property type concentration by loan balance consisting of mixed-use assets (seven loans accounting for 23.4% of the current pool balance). Office assets account for the second-highest property type concentration, with six loans that represent 20.0% of the current pool balance. There are seven loans secured by lodging properties, which have been particularly hard-hit by the global Coronavirus Disease (COVID-19) pandemic; however, the concentration is relatively small as these loans make up only 12.0% of the current pool balance.

At issuance, DBRS Morningstar assigned an investment-grade shadow rating to five loans (all of which are included in the largest 10 loans): Prospectus ID#1 – Parkmerced (7.2% of the current pool); Prospectus ID#2 – 650 Madison Avenue (6.6% of the current pool); Prospectus ID#3 – Kings Plaza (6.6% of the current pool); Prospectus ID#5 – F5 Tower (5.5% of the current pool); and Prospectus ID#7 – Bellagio Hotel and Casino (4.8% of the current pool). With this review, DBRS Morningstar confirmed that the respective performance of each of these loans remains consistent with the characteristics of an investment-grade loan.

As of the January 2021 remittance period, there were five loans on the servicer’s watchlist, representing 7.6% of the current pool balance, including one loan in the top 15, representing 3.1% of the pool. These five loans are being monitored for a variety of reasons including a low debt service coverage ratio, occupancy declines, and/or requests from the respective borrowers for coronavirus relief.

There was also one loan, Prospectus ID#27 – 404-406 Broadway (representing 1.7% of the current pool balance), in special servicing. The loan is secured by a mixed-use property in New York’s Tribeca neighborhood. The property includes approximately 13,683 square feet (sf) of retail (including 4,983 sf of ground floor space) and 2,500 sf of office space and is self-managed by the sponsor. The loan was transferred to the special servicer in April 2020 for imminent monetary default resulting from the impact of the coronavirus pandemic. The loan has notable exposure to fitness tenants (47.5% of net rentable area), which were forced to close by state and local government mandates early in the pandemic and reopened around June 2020, but only at limited capacity. The loan was previously delinquent but was brought current in late 2020 and has remained current since. The information on the workout status has been limited to date, but the current payment status is a promising sign.

The loan-specific certificates represented by Classes F5T-A, F5T-B, F5T-C, and F5T-D are backed by the $112.6 million subordinate companion loan of the $297.6 million F5 Tower whole loan, which is secured by 515,518 sf of Class A office space and a 259-space underground parking garage in Seattle. The office space is 100% leased to F5 Networks, Inc., which uses the space as its headquarters. The loan-specific certificates are not pooled with the remainder of the trust loans. With this review, DBRS Morningstar confirmed that the performance of the underlying loan remains in line with the expectations at issuance, supporting the rating confirmations for those classes.

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.

Classes X-A, X-B, and X-D 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.

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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.

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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