DBRS Morningstar Confirms All Classes of J.P. Morgan Chase Commercial Mortgage Securities Trust 2021-1440

DBRS Limited (DBRS Morningstar) confirmed its ratings on all classes of Commercial Mortgage Pass-Through Certificates issued by J.P. Morgan Chase Commercial Mortgage Securities Trust 2021-1440 as follows:

-- Class A at AAA (sf)
-- Class B at AA (low) (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)

All trends are Stable.

The rating confirmations reflect the transaction’s stable performance as the loan has been performing in line with DBRS Morningstar’s expectations since the transaction closed in March 2021. The $399.0 million loan is secured by the borrower's fee-simple interest in a 740,387-square-foot central business district (CBD) office property in the Midtown submarket of New York. The three-year loan pays full-term interest-only and features two one-year extension options. Loan proceeds were used to refinance existing debt, cover closing costs, and to fund upfront reserves. The loan is sponsored by CIM Group, a fully integrated real estate private equity firm, and QSuper Board, Australia’s oldest and largest super fund with approximately $117.0 billion in funds under management.

The loan has been on the servicer’s watchlist since issuance because of the full cash sweep and will be removed once $20.0 million is collected in its excess cash reserve. The servicer has confirmed that $7.4 million has been reserved to date. DBRS Morningstar requested an updated balance for the excess cash reserve, but the servicer has not provided the figure. The loan was structured with $30.0 million upfront reserves, $27.3 million of which will be allocated toward future leasing costs, and the remaining amount toward future capital expenditure work. The sponsor will also be required to provide $20.6 million in new equity, supported by an equity contribution guarantee, of which $15.3 million will be allocated toward accretive tenant improvement and leasing costs. A $16.8 million portion of the equity contribution is required to be funded on a pro rata basis with the disbursement of the $30.0 million upfront reserve.

As of the provided September 2021 rent roll, the property is 93.0% occupied, with the office portion 96.7% occupied while the retail portion is 49.3% occupied. The largest tenants include WeWork (40.5% of the net rentable area (NRA); lease expiry June 2035), Macy’s (26.6% of the NRA; lease expiry January 2024), and Kate Spade & Company (9.1% of the NRA). Kate Spade & Company fully sublets its space to two tenants, Land’N Sea (lease expiry January 2027) and CNY Group (lease expiry April 2033). It is also noteworthy that at issuance, Macy’s decided to prepay all remaining rent obligations at the subject property, and as of the December 2021 loan level reserve report there was $24.2 million in Macy’s rent reserve account. No updated financials were made available as of this review.

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 loan-level 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].

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada
Tel. +1 (416) 593 5577