DBRS Morningstar Confirms Ratings on All Classes of BX Commercial Mortgage Trust 2022-CSMO

DBRS Limited (DBRS Morningstar) confirmed ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2022-CSMO issued by BX Commercial Mortgage Trust 2022-CSMO:

-- Class A at AAA (sf)
-- Class B at AA (high) (sf)
-- Class C at AA (low) (sf)
-- Class D at A (sf)
-- Class E at BBB (low) (sf)
-- Class F at BB (sf)

All trends are Stable.

The rating confirmations reflect a deal that is early in its lifecycle with limited reporting and no changes to the underlying performance of the collateral since issuance. The transaction is collateralized by The Cosmopolitan Las Vegas Resort & Casino, a 3,032-key hotel with approximately 110,000 square feet of casino space, located on the Las Vegas Strip. The two-year floating-rate loan pays interest-only and has three one-year extension options, with a fully extend maturity date in June 2027. The $3.0 billion loan, along with a $1.0 billion of sponsor equity, funded the acquisition of the collateral by a joint venture 80.0% indirectly owned by BREIT Operating Partnership L.P., a Blackstone Fund Entity, and 20.0% owned by Stonepeak Partners LP. The borrower entered into a 30-year triple-net master/operating lease with three 10-year renewal options with a wholly owned subsidiary of MGM Resorts International (MGM). The lease payments will be fully guaranteed by MGM.

According to the YE2022 financials, the loan reported a net cash flow (NCF) of $190.8 million, compared to DBRS Morningstar NCF at issuance of $353.1 million. This drop in NCF was primarily driven by an increase in expenses but the reporting grouped several of its expense items together, including real estate taxes and insurance, with repairs and maintenance, and general and administrative expenses. However, the YE2022 departmental revenue was reported at $1.2 billion and departmental income at $697.8 million, both of which are above the DBRS Morningstar departmental revenue of $1.0 billion and departmental income of $556.7 million. The deal closed in June 2022 and as such, DBRS Morningstar expects the reporting to stabilize as the deal seasons.

The YE2022 financials reported an occupancy rate, average daily rate (ADR) and revenue per available room (RevPAR) of 98.9%, $426.18, and $421.57, respectively. This compares well against the issuance occupancy rate, ADR, and RevPAR of 90.0%, $449.60, and $404.42, respectively. At issuance, the subject was reported to have the highest RevPAR in its competitive set.

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 (May 17, 2022) at https://www.dbrsmorningstar.com/research/396929.

All ratings are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by DBRS Morningstar.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is North American CMBS Surveillance Methodology (March 16, 2023; https://www.dbrsmorningstar.com/research/410912).

Other methodologies referenced in this transaction are listed at the end of this press release.

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 rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the rating process for this rating action.

DBRS Morningstar had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

This is a solicited credit rating.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

DBRS Limited
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Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577

The rating methodologies used in the analysis of this transaction can be found at: https://www.dbrsmorningstar.com/about/methodologies.

North American Single-Asset/Single-Borrower Ratings Methodology (February 23, 2023; https://www.dbrsmorningstar.com/research/410191)

DBRS Morningstar North American Commercial Real Estate Property Analysis Criteria (September 12, 2022; https://www.dbrsmorningstar.com/research/402646)

North American Commercial Mortgage Servicer Rankings (September 8, 2022; https://www.dbrsmorningstar.com/research/402499)

Interest Rate Stresses for U.S. Structured Finance Transactions (August 30, 2022; https://www.dbrsmorningstar.com/research/402153)

Legal Criteria for U.S. Structured Finance (December 7, 2022; https://www.dbrsmorningstar.com/research/407008)

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].