DBRS Morningstar Confirms All Ratings of BPR Trust 2021-TY

DBRS Limited (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass-Through Certificates, Series 2021-TY issued by BPR Trust 2021-TY as follows:

-- Class A at AAA (sf)
-- Class X-CP at AAA (sf)
-- Class X-EXT at AAA (sf)
-- Class B at AAA (sf)
-- Class C at AA (high) (sf)
-- Class D at AA (low) (sf)
-- Class E at BBB (high) (sf)
-- Class F at BBB (sf)
-- Class HRR at BBB (low) (sf)

All trends are Stable.

The rating confirmations reflect the transaction’s overall stable performance, which remains in line with DBRS Morningstar’s expectations at issuance.

The loan is secured by the non-department store component of Tysons Galleria, a Class A super-regional mall. The collateral consists of approximately 488,000 square feet (sf) of the property’s total 740,000 sf. The property is located approximately 15 miles west of downtown Washington, in McLean, Virginia. The mall is anchored by Neiman Marcus and Saks Fifth Avenue, both of which are non-collateral tenants. Prior to issuance, the former Macy’s space was redeveloped into a 200,000 sf, three-story, multitenant wing that now accommodates a variety of entertainment, restaurant, and junior anchor retail users. The $120.0 million redevelopment project began in 2019 and was completed in September 2021. Tenants include experiential and lifestyle brands such as, Bowlero, CMX CineBistro, Crate & Barrel, and Restoration Hardware. The loan is sponsored by Brookfield Property REIT Inc.

According to the December 2021 rent roll, the overall property was 91.7% occupied, which is slightly lower than the 95.1% occupancy rate at issuance. The tenant roster is relatively granular with no single collateral tenant occupying more than 5.0% of the total net rentable area (NRA). Although leases totalling 74,425 sf are set to roll within the next 12 months, approximately 20,000 sf of new leases have been signed with tenants expected to take occupancy through 2022 and 2023. At issuance, there was an upfront reserve of $24.5 million for existing obligations associated with the redevelopment of the former Macy’s anchor box space. As of the August 2022 remittance report, the loan reported $21.8 million currently held in tenant reserves.

According to the YE2021 tenant sales report, in-line tenants occupying less than 10,000 sf reported sales of $1,679 per square foot (psf), compared with YE2020 sales of $922 psf, and in-line tenants occupying more than 10,000 sf reported YE2021 sales of $525 psf, compared with YE2020 sales of $277 psf. No updated financials were provided but the DBRS Morningstar net cash flow derived at issuance was $34.4 million.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors 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.

Classes X-CP and X-EXT 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.

The DBRS Viewpoint platform provides additional information on this transaction and underlying loan 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 the 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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