DBRS Morningstar Confirms All Classes of BSPDF 2021-FL1 Issuer, Ltd.

DBRS Limited (DBRS Morningstar) confirmed the ratings on the following classes of notes issued by BSPDF 2021-FL1 Issuer, Ltd.:

-- 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 (high) (sf)
-- Class G at BB (low) (sf)
-- Class H 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 pool consisted of 21 floating-rate mortgage loans and participation interests in mortgage loans secured by 49 mostly transitional properties with a cut-off balance totalling $621.8 million, excluding $67.9 million of remaining future funding commitments (inclusive of junior participations) and $88.7 million of pari passu debt. Most loans were in a period of transition with plans to stabilize and improve the asset value. The transaction is a managed vehicle with a 24-month reinvestment period ending with the October 2023 Payment Date. As part of the reinvestment period, the transaction included up to a 180-day ramp-up acquisition period at closing. The ramp-up period was completed in January 2022 when the cumulative trust loan balance totalled the maximum target transaction balance of $775.0 million.

Since closing, seven new loans have been added to the pool with a cumulative trust loan balance of $152.6 million. As of the June 2022 remittance, the pool comprises 31 loans secured by 57 properties with a cumulative trust balance of $775.0 million. The transaction is concentrated by property type as 20 loans, totalling 67.4% of the current trust balance, are secured by multifamily properties and three loans, totalling 20.6% of the current trust balance, are secured by office properties. In comparison with closing, there were 15 loans, representing 63.8% of the funded pool balance, secured by multifamily properties and two loans, representing 22.2% of the funded pool balance, secured by office properties.

In general, the borrowers continue to progress toward completing the stated business plans. As of June 2022, the collateral manager had released $12.1 million in loan future funding to 19 individual borrowers. The largest advance, $1.7 million, was made to the borrower of the The Franklin loan, which is secured by a multifamily property loan in Fort Worth, Texas. The borrower’s business plan is to complete a capital improvement program to increase occupancy and rental rates. An additional $76.9 million of loan future funding, allocated to 23 borrowers to further aid in property stabilization efforts, remains outstanding. Of this amount, $18.3 million is allocated to the borrower of the 5 Post Oak Park loan and $12.5 million is allocated to the borrower of the Boardwalk at Morris Bridge loan, which are respectively secured by an office property in Houston and a multifamily property in Temple Terrace, Florida.

As of the June 2022 remittance, no loans are in special servicing; however, 10 loans, representing 33.8% of the current pool balance, are on the servicer’s watchlist. Nine of the loans are being monitored for performance declines, yet this was expected at issuance as a result of the proposed business plans. The remaining loan, The Drayton Hotel (Prospectus ID#15, 2.3% of the pool), is secured by a 50-key boutique hotel in Savannah, Georgia, which has been flagged for a cash sweep event. The Signature Page Cash Sweep has increased the interest rate, which will be reduced once the borrower has submitted a fully signed LLC Operating Agreement. An additional two loans, representing 2.2% of the current pool balance, have received a loan modification since the transaction closed with each related to changes in terms of the equity advance to the respective borrowers.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.

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/396929/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings.

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 – 345 Seventh Avenue (10.1% of the pool)
-- Prospectus ID#2 – 5 Post Oak Park (7.7% of the pool)
-- Prospectus ID#3 – The Franklin (7.2% of the pool)
-- Prospectus ID#8 – MRP Capital Retail Portfolio (4.8% of the pool)
-- Prospectus ID#12 – Boardwalk at Morris Bridge (3.0% 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.

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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