DBRS Morningstar Confirms Ratings on All Classes of Morgan Stanley Capital I Trust 2020-HR8

DBRS Limited (DBRS Morningstar) confirmed its ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2020-HR8, issued by Morgan Stanley Capital I Trust 2020-HR8 (MSC 2020-HR8):

-- Class A-1 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class X-A at AAA (sf)
-- Class A-S at AAA (sf)
-- Class A-3-1 at AAA (sf)
-- Class A-3-2 at AAA (sf)
-- Class A-3-X1 at AAA (sf)
-- Class A-3-X2 at AAA (sf)
-- Class A-4-1 at AAA (sf)
-- Class A-4-2 at AAA (sf)
-- Class A-4-X1 at AAA (sf)
-- Class A-4-X2 at AAA (sf)
-- Class A-S-1 at AAA (sf)
-- Class A-S-2 at AAA (sf)
-- Class A-S-X1 at AAA (sf)
-- Class A-S-X2 at AAA (sf)
-- Class B at AAA (sf)
-- Class X-B at AA (low) (sf)
-- Class X-D at AA (low) (sf)
-- Class C at A (high) (sf)
-- Class D at A (high) (sf)
-- Class E-RR at A (low) (sf)
-- Class F-RR at A (low) (sf)
-- Class G-RR at BBB (sf)
-- Class H-RR at BB (high) (sf)
-- Class J-RR at BB (sf)
-- Class K-RR at B (high) (sf)
-- Class L-RR at B (low) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction, which generally remains in line with DBRS Morningstar’s issuance expectations. The trust consists of 43 fixed-rate loans secured by 76 commercial and multifamily properties with an aggregate principal balance of $688.7 million as of the April 2022 reporting, reflecting a nominal collateral reduction of 0.3% since issuance. No loans have been defeased. Amortization has been limited, as 31 loans, representing 73.7% of the current pool balance, are structured as full-term interest only (IO) and an additional seven loans, representing 15.9% of the current pool balance, are structured as partial IO and remain in their respective IO periods.

The pool is relatively concentrated by loan amount, as the largest 10 loans represent 59.2% of the current pool balance; however, two of these loans, 525 Market Street (Prospectus ID#5; 5.8% of the current pool) and Bellagio Hotel and Casino (Prospectus ID#6, 5.7% of the pool), were assigned investment grade shadow ratings at issuance. With this review, DBRS Morningstar confirmed that the respective performance of each of these loans remains consistent with the characteristics of an investment grade loan. The pool is well diversified by property type, with the three largest concentrations being multifamily (38.2% of the current pool), office (28.5% of the current pool), and mixed-use properties (16.1% of the current pool). By geographical location, the most significant concentrations are in New York (25.8% of the current pool), California (15.1% of the current pool), and Texas (14.0% of the current pool).

As of the April 2022 reporting, there are no specially serviced or delinquent loans. There are two loans, representing 10.0% of the current pool, on the servicer’s watchlist, which are being monitored for items of deferred maintenance. The larger of the two loans, Texas Multifamily Portfolio (Prospectus ID#4, 7.5% of the current pool), is secured by a four-property multifamily portfolio in Houston and Baytown, Texas, containing 1,034 units. The July 2021 servicer site inspection for Azul Apartments in Baytown noted 24 down units at the property; 17 were caused by fire, four were down when the asset was purchased, and the remaining three were a result of recent ceiling damage. According to servicer commentary, the repairs were 70.0% complete as of February 2022. The property was 96.9% occupied at year-end 2021 and the loan reported a net cash flow of $1.5 million, reflective of an amortizing debt service coverage ratio of 1.35 times (x).

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.

Classes X-A, X-B, and X-D are interest-only (IO) certificates that reference 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.

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

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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