DBRS Morningstar Confirms Ratings on MF1 2020-FL4, Ltd.

DBRS Limited (DBRS Morningstar) confirmed its ratings on the following classes of notes issued by MF1 2020-FL4, Ltd. (the Issuer):

-- Class A at AAA (sf)
-- Class A-S at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class D at BBB (sf)
-- Class E at BBB (low) (sf)
-- Class F at BB (low) (sf)
-- Class G at B (low) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction, which has remained in line with DBRS Morningstar’s expectations since issuance. In conjunction with this press release, DBRS Morningstar has published a Surveillance Performance Update report with in-depth analysis and credit metrics for the transaction and with business plan updates on select loans. To access this report, please click on the link under Related Documents below or contact us at [email protected].

The transaction closed in November 2020 with the initial collateral pool consisting of 22 floating-rate mortgage loans, secured by 29 transitional multifamily properties totaling $783.3 million, excluding $203.7 million of remaining future funding commitments and $168.0 million of pari passu debt. Most of the loans contributed at issuance were secured by cash flowing assets, with some level of stabilization remaining. The transaction was structured with a 90-day ramp-up acquisition period, whereby the Issuer planned to acquire up to $166.7 million of additional collateral. The ramp-up was completed in February 2021 after eights loans with a cumulative trust balance of $249.8 million were added to the transaction.

The transaction is also structured with an 18-month reinvestment period, expiring with the May 2022 Payment Date. Reinvestment of principal proceeds during the reinvestment period are subject to Eligibility Criteria, which includes, but is not limited to, a rating agency no-downgrade confirmation by DBRS Morningstar for all new mortgage assets and funded companion participations exceeding $1.0 million. As of October 2021 reporting, the Replenishment Account had a balance of $199.6 million, available to the collateral manager to purchase additional loan interests into the transaction.

As of the October 2021 remittance report, the transaction consists of 28 loans with a cumulative loan balance of $750.4 million. Through October 2021, the collateral manager has advanced loan future funding of $28.4 million to 13 individual borrowers to aid in property stabilization efforts. An additional $26.3 million of loan future funding allocated to 13 individual borrowers has yet to be advanced.

The transaction is concentrated by property type as 27 loans, representing 89.0% of the outstanding cumulative loan balance, are secured by multifamily properties. The remaining loan, Crestavilla (Prospectus ID#2), is secured by a senior housing property. The transaction is also concentrated by loan size, as the largest 10 loans represent 64.7% of the pool. One loan, Edison (Prospectus ID#7; 3.6% of the transaction balance), is on the servicer’s watchlist for its upcoming November 2021 maturity; however, the servicer has confirmed the borrower will exercise the loan’s first one-year extension option, pushing the maturity date to November 2022.

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.

All ratings are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by DBRS Morningstar.

The DBRS Viewpoint platform provides additional information on this transaction and underlying loans including DBRS Morningstar metrics, commentary, servicer-reported cash flows, and other performance-related data.

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 is the North American CMBS Surveillance Methodology (March 26, 2021), 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.

The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482/baseline-macroeconomic-scenarios-application-to-credit-ratings.

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 [email protected].

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 [email protected].

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