DBRS Morningstar Confirms All Classes of FREMF 2020-K106 Mortgage Trust, Series 2020-K106

DBRS, Inc. (DBRS Morningstar) confirmed the ratings on the following classes of Multifamily Mortgage Pass-Through Certificates, Series 2020-K105 issued by FREMF 2020-K106 Mortgage Trust, Series 2020-K106 as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class X1 at AAA (sf)
-- Class X2-A at AAA (sf)
-- Class XAM at AA (sf)
-- Class A-M at AA (low) (sf)
-- Class B at A (low) (sf)
-- Class X2-B at BBB (high) (sf)
-- Class C at BBB (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance. As of the February 2021 remittance, all of the original 52 fixed-rate loans remain in the pool with immaterial amortization to date. The DBRS Morningstar weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield at issuance were 1.50 times (x) and 7.4%, respectively. The top 15 loans represent approximately 54.1% of the current pool balance. As of the February 2021 remittance, there are no specially serviced or delinquent loans.

There are two loans on the servicer’s watchlist, representing 4.6% of the current pool balance, as of the February 2021 remittance. The largest loan on the servicer’s watchlist, Aperture (Prospectus ID#14, 2.7% of the pool), is secured by an 83-unit, Class A, garden-style multifamily property in San Bruno, California. The loan was added to the servicer’s watchlist after occupancy decreased to 54% as of September 2020 because of issues related to the Coronavirus Disease (COVID-19). Occupancy appears to be stabilizing as it increased to 89% as of January 2021 and has a pre-lease rate of 93%. The other loan on the servicer’s watchlist, Sunpointe Apartments (Prospectus ID#21; 1.9% of the pool), is secured by a portfolio of 14 multifamily properties in Vancouver, Washington. One of the properties sustained fire damage in May 2020, affecting 10 units. Seven of the units remain down, while three were re-leased to new tenants. The borrower anticipates the remaining repairs will be completed by the end of March 2021. As of September 2020, the property reported an occupancy rate of 96% with an in-place DSCR of 1.91x.

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 X1, X2-A, XAM, and X2-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 complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com. The platform includes issuer and servicer date 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 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.

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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