DBRS Morningstar Confirms Ratings on All Classes of BSPRT 2021-FL6 Issuer, Ltd.

DBRS Limited (DBRS Morningstar) confirmed its ratings on the classes of notes issued by BSPRT 2021-FL6 Issuer, Ltd. as follows:

-- 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 (high) (sf)
-- Class G at BB (low) (sf)
-- Class H at B (low) (sf)

All trends are Stable.

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

The transaction is a managed collateralized loan obligation pool with a maximum funded balance of $700.0 million. The initial collateral included 21 mortgage loans, consisting of eight whole loans and 13 fully funded senior pari passu, or pari passu participations secured by commercial or multifamily real estate properties with an initial cut-off balance totalling $446.7 million and $43.5 million of available future funding. Most loans are in a period of transition with plans to stabilize and improve the asset value. The ramp-up period concluded in April 2021 with a contribution of 29 additional mortgage loans and the transaction is currently in its 30-month reinvestment period ending September 2023. To date, seven loans have been reinvested in the trust and nine loans have successfully repaid from the trust.

As of the November 2021 remittance, the trust contains 48 loans with an aggregate loan balance of $672.6 million with outstanding future funding commitments of $69.7 million for 33 loans. The transaction benefits from a significant concentration of loans backed by multifamily properties, representing 73.6% of the current pool balance. There are nine loans, representing 16.8% of the current pool balance, on the servicer’s watchlist in November 2021. The loans were flagged for a variety of reasons including occupancy rate decreases, cash management triggers, and low debt-service coverage ratios (DSCR). However, all of these loans are in a transitional phase and are supported by debt-service shortfall reserves set aside at issuance. The loans are performing as contemplated at issuance.

The largest loan on the servicer’s watchlist, Palms on Lamar (Prospectus ID#5; 4.6% of the current pool balance), is secured by a 476-unit garden-style multifamily asset located seven miles north of the Austin, Texas, central business district (CBD). The loan was added to the servicer’s watchlist in July 2021 for a DSCR falling below 1.0 times (x); however, the loan closed cash management in place because of the expected low DSCR. As of the Q3 2021 asset report, the sponsor had some delays in securing contractors to complete the renovation work at the collateral; however, they have been able to address approximately 50.0% of its exterior renovations and will complete interior renovations by the end of Q2 2022. At issuance, it was expected that all interior renovations would be complete by December 2021. As of November 2021, the sponsor has not utilized any of its $2.4 million of future funding, having utilized only $450,000 of its capital improvement reserve. The loan is also structured with an interest reserve with a current balance of $1.1 million as of the November 2021 reserve report.

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 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.

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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