Morningstar DBRS Confirms Credit Ratings on All Classes of Arbor Multifamily Mortgage Securities Trust 2020-MF1

DBRS, Inc. (Morningstar DBRS) confirmed all credit ratings on the classes of Multifamily Mortgage Pass-Through Certificates, Series 2020-MF1 issued by Arbor Multifamily Mortgage Securities Trust 2020-MF1 as follows:

-- Class A-1 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-5 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class AS at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (sf)
-- Class C at AA (low) (sf)
-- Class D at A (low) (sf)
-- Class X-D at BBB (high) (sf)
-- Class E at BBB (sf)

All trends are Stable.

The credit rating confirmations and Stable trends reflect Morningstar DBRS’ overall unchanged view of this transaction since its last review. The transaction consists primarily of loans secured by multifamily assets that continue to report strong financial performance in addition to the significant defeasance, contributing to increased credit support across the transaction. In addition, the unrated Class FRR has a sizeable existing balance of $63.6 million providing insulation to the remining bonds in the event of any potential losses, further supporting the credit rating actions.

As of the July 2024 remittance, all 40 of the original loans remain in the pool, with a marginal collateral reduction of only 1.61% from issuance, due to scheduled loan amortization. The pool is primarily backed by multifamily properties, which represent 37 loans (93.3% of the pool) with the remaining three loans (6.7% of the pool) backed by mixed-use properties. Since Morningstar DBRS’ last rating action, two additional loans have been fully defeased, totaling six loans, which represent 22.4% of the current pool balance. There are no loans in special servicing or delinquent. There are only two loans on the servicer’s watchlist, representing 4.6% of the pool, which is an improvement from the 12 loans at last review. Both of these loans were added to the servicer’s watchlist for performance concerns pertaining to declining debt service coverage ratios (DSCR). Based on the most recent year-end financials from YE2023, excluding defeased loans, the pool reported a weighted-average (WA) DSCR of 1.95 times (x), compared with the YE2022 DSCR of 2.05x and the Morningstar DBRS DSCR of 1.46x for those same loans.

Morningstar DBRS’ credit ratings on the applicable classes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transactions’ respective press releases at issuance.

Morningstar DBRS’ long-term credit ratings provide opinions on risk of default. Morningstar DBRS 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. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (January 23, 2024) at ; https://dbrs.morningstar.com/research/427030.

Classes X-A and X-D 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 Morningstar DBRS.

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

The principal methodology is North American CMBS Surveillance Methodology (March 1, 2024; https://dbrs.morningstar.com/research/428798).

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

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.

Morningstar DBRS 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 credit rating process.

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

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

-- North American CMBS Multi-Borrower Rating Methodology (March 1, 2024)/North American CMBS Insight Model v 1.2.0.0, https://dbrs.morningstar.com/research/428797
-- Rating North American CMBS Interest-Only Certificates (June 28, 2024), https://dbrs.morningstar.com/research/435294
-- Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (June 28, 2024), https://dbrs.morningstar.com/research/435293
-- North American Commercial Mortgage Servicer Rankings (August 23, 2023), https://dbrs.morningstar.com/research/419592
-- Legal Criteria for U.S. Structured Finance (April 15, 2024), https://dbrs.morningstar.com/research/431205

For more information on this credit or on this industry, visit dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.