DBRS Morningstar Confirms Ratings on All Classes of Manhattan West 2020-1MW Mortgage Trust

DBRS Limited (DBRS Morningstar) confirmed the following ratings of the Commercial Mortgage Pass-Through Certificates, Series 2020-1MW issued by Manhattan West 2020-1MW Mortgage Trust:

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

All trends are Stable.

The rating confirmations reflect the stable to improving performance of the transaction, which has remained in line with DBRS Morningstar’s expectations since issuance.

The transaction is collateralized by a trophy 70-story Class A office building in the Hudson Yards submarket of Manhattan, one of the most desirable office locations in Manhattan as large space users have opted to move west and sign major leases. The borrower used whole-loan proceeds of $1.8 billion to refinance existing construction financing held by a syndicate of banks scheduled to mature in April 2021, return equity to the sponsor, fund up-front reserves, and pay closing costs. The transaction benefits from experienced institutional sponsorship in the form of a joint venture partnership between Brookfield Property Partners L.P. (BPY) and the Qatar Investment Authority, noted at issuance, combined with Blackstone Real Estate, which acquired a 49% stake in One Manhattan West in March 2022. BPY, together with its affiliate Brookfield Asset Management, is one of the largest commercial landlords in New York City. BPY's core office portfolio includes interests in 134 Class A office buildings totaling 72.6 million square feet in gateway markets around the world.

The seven-year loan pays a fixed-rate interest of 2.341% on an interest-only basis through the September 2027 maturity of the loan. The building is a component of BPY’s larger Manhattan West mixed-use development project and was delivered in July 2019, with tenants taking occupancy through Q3 2020. The asset benefits from long-term, institutional-grade tenancy with a weighted-average remaining lease term of approximately 14 years. None of the leases in place roll during the loan term and the existing tenants have contractual rent increases built into many of their leases. The earliest scheduled lease expirations of any of the major tenants (Skadden, Arps, Slate, Meagher, & Flom LLP, Ernst & Young, Accenture, National Hockey League, and McKool Smith A Professional Corporation), which together are responsible for more than 85% of base rent, is almost eight full years after loan maturity. The property's tenancy is heavily concentrated, with the top three tenants (Skadden, E&Y, and Accenture) accounting for nearly 75% of the building's net rentable area and a little more than 70% of base rent.

According to the YE2022 rent roll, the property had a physical occupancy rate of 98.2% with an average rental rate of $93.04 per square foot (psf), up slightly from 96.6% and $91.03 psf, respectively, at March 2022. The servicer reported the net cash flow and debt service coverage ratio at $110.9 million and 3.11 times (x), respectively, for YE2022, compared with $105.3 million and 2.96x, respectively, for YE2021, and $34.6 million and 0.97x, respectively, for YE2020, reflecting overall healthy performance metrics.

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 (May 17, 2022).

Classes X is an interest-only (IO) certificate that references 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.

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 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, Inc.
22 West Washington Street
Chicago, IL 60602 USA
Tel. +1 312 332-3429

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)

Rating North American CMBS Interest-Only Certificates (December 19, 2022; https://www.dbrsmorningstar.com/research/407577)

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].