DBRS Morningstar Confirms All Ratings on DBGS 2018-BIOD Mortgage Trust

DBRS, Inc (DBRS Morningstar) confirmed its ratings on all classes of the Commercial Mortgage Pass-Through Certificates, Series 2018-BIOD issued by DBGS 2018-BIOD Mortgage Trust as follows:

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

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since DBRS Morningstar’s last review, with collateral revenue generally in line with the Issuer’s figure since closing in 2018. At issuance, the loan was secured by a portfolio of 22 life-sciences buildings (office and laboratory) and one parking garage totaling 2.4 million square feet. The properties are located across California, Washington, Massachusetts, New York, Pennsylvania, and New Jersey. Since issuance, three properties known as Walnut Street, Trade Centre Avenue, and Bernardo Center Drive have been released. These properties collectively represented 6.7% of the issuance allocated loan amount (ALA), and, based on the release provisions as outlined in the transaction documents, a total release premium of $62.5 million was paid, with proceeds applied pro rata across the bond stack. The pro rata paydown structure will remain in place for releases executed to a cap of 25.0% of the unpaid principal balance on the loan. After the 25.0% threshold is met, the release premium will increase to 110.0% from 105.0% of the ALA and release proceeds will be paid sequentially down the bond stack.

At issuance, the whole-loan proceeds included $725.0 million of senior floating-rate debt, which is held in the subject trust, $140.0 million of senior mezzanine debt, and $95.0 million of junior mezzanine debt. The loans were used to refinance existing debt of $714.6 million, with $216.9 million of equity returned to the sponsor. The sponsor is an affiliate of The Blackstone Group Inc., which acquired the subject in 2016 as part of the acquisition of BioMed Realty Trust, Inc. The loan had an initial two-year term with five one-year extension options, with a final maturity date on May 9, 2025. In May 2021, the borrower exercised its second 12-month extension, extending the maturity until May 9, 2022. The loan is interest only for the fully extended term.

According to the trailing 12-month period (T-12) ended September 30, 2021, net cash flow (NCF) was reported at $57.6 million. While the T-12 NCF is down 10.8% compared with the year-end (YE) 2020 NCF, the September 2021 NCF exceeds the DBRS Morningstar NCF figure of $52.8 million. According to the September 2021 rent roll, the portfolio was 81% occupied, which is a decline from the YE2019 occupancy rate of 92.6%. Given the healthy demand for life-sciences space and the portfolio’s stable historical performance and strong sponsorship for the subject loan, DBRS Morningstar expects the occupancy decline will be short-lived. The 2021 financials are inclusive of income and debt service associated with the Bernardo Center Drive property that was released in January 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.

DBRS Morningstar provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for this transaction.

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.

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/baseline-macroeconomic-scenarios-application-to-credit-ratings.

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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