DBRS Morningstar Confirms All Classes of VASA Trust 2021-VASA

DBRS Limited (DBRS Morningstar) confirmed its ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2021-VASA issued by VASA Trust 2021-VASA

-- Class A at AAA (sf)
-- Class A-Y at AAA (sf)
-- Class A-Z at AAA (sf)
-- Class A-IO 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 overall stable performance of this transaction since issuance. The collateral consists of the borrower’s fee and leasehold interest in a 576,921-square foot (sf) mixed-use office and retail development in the heart of Mountain View, California, which is part of Silicon Valley. The loan is structured with a two-year initial term and three 12-month extension options that are exercisable subject to certain criteria set forth in the initial loan agreement. The floating-rate loan is interest only (IO) through the fully extended loan term. However, commencing after the fully-extended anticipated repayment date in April 2026, the loan is scheduled to hyper-amortize until the balance is repaid in full, subject to a final maturity date of July 31, 2029.

The collateral was originally delivered to market in 2017 and comprises 456,760 sf (79.2% of total net rentable area (NRA)) of Class A office space, 120,161 sf (20.8% of total NRA) of ground- and second-floor retail space, and a nine-story parking garage that is not included in the cumulative NRA. The property is a component of a larger mixed-use development known as the Villages at San Antonio Center, which is outside of the collateral and includes a 90,000-sf grocery-anchored retail center (commonly referred to as The Village Shops), a 167-key hotel operated as a Hyatt Centric, and a 330-unit luxury multifamily property (commonly referred to as The Village Residences, also owned by the subject loan’s sponsor). As of September 2021, the collateral was 90.5% leased to four tenants. The collateral’s office component was originally 100% leased by LinkedIn but, following Microsoft’s acquisition of LinkedIn in 2016, Microsoft assigned the LinkedIn lease to WeWork and provided a guaranty on the assigned lease that extends through July 2029. WeWork has, in turn, enterprise leased 100.0% of the office space to Facebook, which took occupancy prior to the ongoing Coronavirus Disease (COVID-19) pandemic. The servicer has confirmed that WeWork has continued to pay its rent despite business interruption as a result of the pandemic. The collateral’s retail component was 69.5% leased as of September 2021, anchored by a Showplace Icon Theatre. Showplace Icon Theatre reported strong sales at the property prior to the pandemic and has evidenced its commitment to the space through significant capital investment as well as the recent execution of a lease amendment that extended the lease through October 2040.

The sponsor for this transaction is Brookfield Strategic Real Estate Partners III GP L.P., which is a $15.0 billion global private real estate find managed by Brookfield Asset Management Inc., an alternative asset manager and one of the largest owners and managers of office properties.

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.

Class A-IO is an IO certificate that references 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 this transaction.

The DBRS Morningstar 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 4, 2022), 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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