Morningstar DBRS Assigns Provisional Credit Ratings to BFLD Trust 2024-UNIV

DBRS, Inc. (Morningstar DBRS) assigned provisional credit ratings to the following classes of Commercial Mortgage Pass-Through Certificates, Series 2024-UNIV (the Certificates) to be issued by BFLD Trust 2024-UNIV:

-- Class A at (P) AAA (sf)
-- Class B at (P) AA (low) (sf)
-- Class C at (P) A (low) (sf)

All trends are Stable.

The collateral for BFLD Commercial Mortgage Trust 2024-UNIV (BFLD 2024-UNIV or the Trust) includes the borrower's fee-simple interest in nine student housing properties and leasehold interest in two student housing properties totaling 2,139 units and 6,777 beds located throughout Texas (three properties, 34.4% of ALA), Arizona (one property; 15.4% of ALA), New Hampshire (one property; 13.2% of ALA), Missouri (two properties; 12.0% of ALA), Arkansas (one property; 10.5% of ALA), Maine (one property; 6.8% of ALA), North Carolina (one property; 5.5% of ALA), and Colorado (one property; 2.2% of ALA). Transaction proceeds of $493.8 million and mezzanine debt of $50.0 million, along with the transaction sponsor's cash equity of $211.0 million, will be used to acquire the portfolio for a purchase price of $731.0 million, cover $13.8 million closing costs, and fund a $10.0 million renovation letter of credit ("LOC"). According to the sponsor, its current business plan incorporates spending approximately $11.0 million (approximately $5,142 per unit) as part of a renovation program that focuses on unit interiors at four assets within the portfolio: Canvas Townhomes Columbia, Reserve Orono, Central House Columbia, and Flats at the Oval. As of the September 2024 rent roll, the portfolio was 96.4% occupied.

The portfolio is made up of stabilized Class A mid-rise (four properties; 28.9% of ALA), garden (four properties; 28.0% of ALA), townhome (two properties; 22.2% of ALA), and high-rise (one property; 21.0% of ALA) student housing properties with a WA year built of 2015. All properties have exceptional amenities with modern unit finishes and generally represent some of the higher-quality student housing units in their respective markets. Common-area amenities for properties in the portfolio include resort-style pools, club rooms, fitness centers, and study rooms. With a WA distance to campus of 0.27 miles, all 11 properties are well located adjacent to their respective university campuses; this should continue to drive occupancy rates, which have averaged a strong 94.6% since the 2019/2020 academic school year.

Morningstar DBRS' 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 the related Principal Distribution Amounts and Interest Distribution Amounts for the rated classes.

Morningstar DBRS' credit ratings do not address nonpayment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations. For example, the credit ratings do not address Spread Maintenance Premiums.

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 Factors in Credit Ratings (August 13, 2024) at https://dbrs.morningstar.com/research/437781.

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 Single-Asset/Single-Borrower Ratings Methodology (September 19, 2024), https://dbrs.morningstar.com/research/439699.

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

With regard to due diligence services, Morningstar DBRS 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 Morningstar DBRS' methodology, Morningstar DBRS used the data file outlined in the independent accountant's report in its analysis to determine the credit ratings referenced herein.

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 these credit rating actions.

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

This is a solicited credit rating.

A provisional credit rating is not a final credit rating with respect to the above-mentioned securities and may change or be different than the final credit ratings assigned or may be discontinued. The assignment of the final credit ratings on the above-mentioned securities are subject to receipt by Morningstar DBRS of all data and/or information and final documentation that Morningstar DBRS deems necessary to finalize the credit ratings.

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.

-- Legal Criteria for U.S. Structured Finance (April 15, 2024), https://dbrs.morningstar.com/research/431205
-- North American Commercial Mortgage Servicer Rankings (August 23, 2024), https://dbrs.morningstar.com/research/438283
-- Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (September 19, 2024), https://dbrs.morningstar.com/research/439702

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