DBRS Morningstar Confirms Ratings on Ready Capital Mortgage Financing 2021-FL6, LLC

DBRS Limited (DBRS Morningstar) confirmed the ratings on all classes of notes issued by Ready Capital Mortgage Financing 2021-FL6, LLC (the Issuer) 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 (low) (sf)
-- Class G 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 initial collateral consisted of 52 floating-rate mortgage assets with an aggregate cutoff date balance of $652.5 million secured by 55 mortgaged properties. The aggregate unfunded future funding commitment of the future funding participations as of the cutoff date was $87.8 million. The collateral pool for the transaction is static with no ramp-up period or reinvestment period; however, the Issuer has the right to use principal proceeds to acquire funded loan future funding participations subject to stated criteria during the Permitted Funded Companion Participation Acquisition Period. This period is expected to end with the July 2023 Payment Date. As of the April 2022 remittance, the pool comprises 51 loans secured by 54 properties with a cumulative trust balance of $652.5 million. There was approximately $87,000 in the Permitted Funded Companion Participation Account. Since issuance, one loan, Pennytree Apartments (Prospectus ID#20) has been repaid from the trust.

The transaction is concentrated by property type, as 44 loans, totalling 90.7% of the current cumulative loan balance, are secured by multifamily properties, and four loans, totalling 5.4% of the current cumulative loan balance, are secured by industrial properties. The transaction is also concentrated by loan size, as the 10 largest loans represent 51.4% of the pool balance. Overall pool leverage metrics remain similar with issuance as the current weighted average (WA) in-place loan-to-value ratio (LTV) is 73.4% compared with 73.2% at closing, and the WA stabilized LTV is 65.6% compared with 65.5% at closing. Additionally, the majority of the collateral pool is secured by properties in suburban markets, defined as locations with a DBRS Morningstar Market Rank of 3, 4, and 5. This includes 36 properties representing 80.6% of the current pool balance. An additional eight properties, representing 12.6% of the current pool balance, are in urban markets with DBRS Morningstar Market Ranks of 6, 7, and 8.

In general, borrowers continue to progress toward completing the stated business plans as, through March 2022, the collateral manager had advanced $22.5 million in loan future funding to 35 individual borrowers since the transaction closed in August 2021. An additional $64.3 million of loan future funding allocated to 50 borrowers remains outstanding to further aid in property stabilization efforts. As of the April 2022 remittance, there are no delinquent loans, no loans are in special servicing, and no loans are on the servicer’s watchlist.

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#2 – Clifton Glen (6.6% of the pool)
-- Prospectus ID#3 – Desert Gardens (5.7% of the pool)
-- Prospectus ID#4 – Lucern Charlotte Portfolio (4.9% of the pool)
-- Prospectus ID#5 – Tides on 25th (4.9% of the pool)
-- Prospectus ID#6 – LaVista Crossing (4.2% of the pool)

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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