DBRS Morningstar Confirms Ratings on MF1 2021-FL6, Ltd.

DBRS, Inc. (DBRS Morningstar) confirmed its ratings on the following classes of notes issued by MF1 2021-FL6, Ltd. (the Issuer):

-- Class A Notes at AAA (sf)
-- Class A-S Notes at AAA (sf)
-- Class B Notes at AA (low) (sf)
-- Class C Notes at A (low) (sf)
-- Class D Notes at BBB (sf)
-- Class E Notes at BBB (low) (sf)
-- Class F Notes at BB (low) (sf)
-- Class G Notes 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 June 2021 with an initial collateral pool of 37 floating-rate mortgage loans secured by 50 multifamily properties, one senior housing property, and one student housing property totaling $993.2 million (76.4% of the total fully funded balance), excluding $101.0 million of remaining future funding commitments and $620.5 million of pari passu debt. Most loans were in a period of transition with plans to stabilize and improve asset value. The transaction included a 90-day ramp-up acquisition period following the closing date, which was completed in October 2021 when the cumulative loan balance totaled $1.30 billion. The transaction is structured with a Reinvestment Period through the June 2023 Payment Date, whereby the Issuer may acquire additional loan collateral participations into the trust subject to Eligibility Criteria as defined at issuance.

As of the March 2022 remittance, the pool comprised 47 loans secured by 58 properties with a cumulative trust balance of $1.25 billion. Since issuance, two loans have successfully repaid from the pool and one loan, Park Portfolio (Prospectus ID#3), was ultimately never securitized in the transaction, which was not contemplated at issuance. Since the transaction closed in June 2021, 13 loans with a cumulative trust balance of $363.3 million have been contributed to the trust. As of the March 2022 remittance, the Reinvestment Account had a balance of $48.4 million. In general, borrowers are progressing toward completing the stated business plans; through March 2022, the collateral manager had released $54.1 million in loan future funding allocated to 26 individual borrowers to aid in property stabilization efforts. An additional $65.9 million of unadvanced loan future funding allocated to 25 individual borrowers remains outstanding.

The transaction is concentrated by property type as 44 loans are secured by multifamily properties, totaling 91.5% of the current trust balance, and two loans are secured by senior housing properties, totaling 6.9% of the current trust balance. The transaction is fairly granular by loan size, as the largest 10 loans represent 37.4% of the pool. No loans were on the servicer’s watchlist or in special servicing as of the March 2022 remittance. In addition, two loans, representing 1.1% of the pool balance, have been modified since issuance. These loans, LA Multifamily Portfolio III and SF Multifamily Portfolio III, are associated with the same sponsorship group, Veritas Investment Group, which continues to execute its business plan of renovating rent-controlled multifamily units upon becoming vacant and increasing rents to market.

Loans contributed during the initial ramp-up and subsequent ongoing reinvestment periods were characterized with similar leverage at closing as the current poolwide weighted-average as-is loan-to-value (LTV) and stabilized LTV ratios are 76.7% and 66.5%, respectively, compared with the issuance figures of 70.6% and 65.5%, respectively. In addition, properties in markets with DBRS Morningstar Market Ranks of 2, 3, 4, and 5 represent 65.8% of the cumulative funded loan balance, an increase from issuance of 49.9% at transaction closing. These markets are tertiary and suburban in nature and historically have not benefited as much as urban markets in terms of investor demand and liquidity. Loans representing the remaining 34.2% of the cumulative funded loan balance are secured by properties in markets DBRS Morningstar considers as urban in nature. At closing, loans secured by properties in urban markets represented 50.1% of the cumulative funded loan balance.

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.

DBRS Morningstar provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Prospectus ID#1 – Vespaio (6.0% of the pool)
-- Prospectus ID#2 – Gallerie Apartments (4.6% of the pool)
-- Prospectus ID#47 – Civitas Portfolio (4.5% of the pool)
-- Prospectus ID#4 – Venn on Market (4.4% of the pool)
-- Prospectus ID#5 – Hardware Village (3.2% of the pool)

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 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 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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