DBRS Morningstar Assigns Provisional Ratings to CRSO Trust 2023-BRND

DBRS Inc. (DBRS Morningstar) assigned provisional ratings to the following classes of Commercial Mortgage Pass-Through Certificates, Series 2023-BRND (the Certificates) to be issued by CRSO Trust 2023-BRND:

-- Class A at AAA (sf)
-- Class X-CP at AA (low) (sf)
-- Class X-NCP at AA (low) (sf)
-- Class B at AA (low) (sf)
-- Class HRR at A (high) (sf)

All trends are Stable.

The CRSO 2023-BRND single-asset/single-borrower transaction is collateralized by the borrower’s fee-simple and leasehold interest in The Americana at Brand, a 569,959-square foot Class A, luxury lifestyle center approximately 8.8 miles north of downtown Los Angeles in Glendale, California. The collateral was constructed in 2008 as part of a larger development with 241 luxury rental apartments and 100 residential condominiums that are not part of the collateral. The retail aspect is anchored by a Nordstrom with other major tenants including AMC Theatres, Barnes & Nobel, H&M, Amazon Style, and Apple. The sponsor has utilized the mall’s historical performance and lack of high-end retailers in the market to secure leases with luxury brands including Balenciaga, Bottega Veneta, Byredo, Golden Goose, and Louis Vuitton, among others, to become one of the top luxury destinations in Los Angeles. The mall also displays the sponsor’s strategy of combining its retail assets with five-star hospitality to create luxury destinations through its amenities and common space. Morgan Stanley Bank, N.A. and Goldman Sachs Bank USA co-originated the mortgage loan to The American at brand, LLC, and Colorado & Orange, LLC (collectively, the Borrower), which are indirectly owned and controlled by Century investments, Inc. (the Guarantor), which is ultimately controlled by Rick J. Caruso.

The Americana at Brand is well located within an affluent and established trade area in Glendale, and benefits from excellent connectivity and accessibility via a plethora of regional thoroughfares. The collateral was 99.1% leased as of July 1, 2023, with an overall property occupancy of 94.1%. The property has maintained generally consistent occupancy rates in recent years, with an average annual occupancy rate of 98.0% achieved between 2015 and 2022. The collateral demonstrated strong comparable in-line sales of approximately $1,259 per square foot (psf) (excluding Tesla) in the trailing 12 months (T-12) ended April 30, 2023. This represents a 26.2% increase from the 2021 sales of $997 psf (excluding Tesla), which is largely the result of the sponsor’s shift to luxury retailers at the asset. Additionally, over the same T-12 period, the collateral achieved comparable in-line sales, reflecting a reasonable occupancy cost of just 16.8%.

Considering the collateral’s favorable location, generally consistent occupancy trends, historically strong in-line sales, strong sponsorship, and ongoing transformation, DBRS Morningstar has a generally positive view of its credit characteristics. Although brick-and-mortar retailers are facing secular headwinds and the continued proliferation of e-commerce continues to gain traction, the collateral has displayed consistent improvement in performance and sales at the property continue to be on the rise.

DBRS Morningstar’s credit ratings on the Certificates address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations are listed at the end of this Press Release.

DBRS Morningstar’s credit ratings do not address non-payment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations. For example, Yield Maintenance Premium.

DBRS Morningstar’s long-term credit ratings provide opinions on risk of default. DBRS Morningstar considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued.

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/416784 (July 4, 2023).

Classes X-CP and X-NCP 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 credit ratings are subject to surveillance, which could result in credit 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 the North American Single-Asset/Single-Borrower Ratings Methodology (February 23, 2023; https://www.dbrsmorningstar.com/research/410191).

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

With regard to due diligence services, DBRS Morningstar was provided with the Form ABS Due Diligence-15E (Form-15E), which contains a description of the information that a third party reviewed in conducting the due diligence services and a summary of the findings and conclusions. While due diligence services outlined in Form-15E do not constitute part of DBRS Morningstar’s methodology, DBRS Morningstar used the data file outlined in the independent accountant’s report in its analysis to determine the credit ratings referenced herein.

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 credit rating was initiated at the request of the rated entity.

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

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

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

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

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

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

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

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

Financial Obligations of the Issuer are listed as follows:

• Class A Principal Amount
• Class A Interest Distribution Amount
• Class X-CP Interest Distribution Amount
• Class X-NCP Interest Distribution Amount
• Class B Principal Amount
• Class B Interest Distribution Amount
• Class HRR Principal Amount
• Class HRR Interest Distribution Amount