DBRS Morningstar Confirms Ratings of GS Mortgage Securities Corporation Trust 2021-ARDN

DBRS Limited (DBRS Morningstar) confirmed its ratings on all Classes of the Commercial Mortgage Pass-Through Certificates, Series 2021-ARDN issued by GS Mortgage Securities Corporation Trust 2021-ARDN, as follows:

-- Class A at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (high) (sf)
-- Class D at A (low) (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. The loan is secured by the fee-simple interest in a portfolio of 140 flex buildings consisting of approximately 5.2 million square feet (sf) across 26 business parks and within the greater metro areas of eight cities: Atlanta; Indianapolis; Philadelphia; Tampa, Florida; Columbus, Ohio; Charlotte, North Carolina; Dallas;and San Antonio, Texas. The collateral benefits from institutional-quality sponsorship from a joint venture between Arden Group and Arcapita Group (Arcapita).

The floating-rate interest-only (IO) loan has an initial term of 24 months, with three one-year extension options available. The loan proceeds of $446.0 million, along with $155.0 million of sponsor equity, were used to finance the recapitalization of the underlying portfolio through a 49% acquisition by Arcapita. The transaction is structured with pro rata paydowns associated with property releases for the first 20% of the original principal balance, proceeds applied sequentially thereafter. As a condition of the property release provisions, the borrower is required to pay a release price of 110% of the allocated loan amount (ALA) until the outstanding pool balance is reduced to 90% of the original balance, 115% of the ALA until the outstanding balance is further reduced to 80%, and 125% of the ALA thereafter. In addition, the portfolio debt yield following such release must be equal to the greater of the debt yield at closing of 8.3% and the debt yield for the trailing 12 months. The mortgage loan is also structured to comply with Shari’ah law and each property is subject to a master lease.

The mortgage loan represents a 75.0% loan-to-value ratio (LTV) based on the issuance value of $595.5 million. As of the March 2022 rent roll, occupancy for the portfolio increased to 96.4% from 91.6% at issuance. The tenant roster is relatively granular with no single tenant occupying more than 2.0% of the total net rentable area The DBRS Morningstar net cash flow and debt service coverage ratio at issuance was $29.0 million and 2.14 times, respectively.

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/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings (May 17, 2022).

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.

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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