Morningstar DBRS Assigns Provisional Credit Ratings to TCO Commercial Mortgage Trust 2024-DPM

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

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

All trends are Stable.

The TCO Commercial Mortgage Trust 2024-DPM single-asset/single-borrower transaction is collateralized by the borrower's fee-simple interest in Dolphin Mall Miami, a 1,437,934-square foot (sf) Class A super-regional mall located approximately 9.0 miles west of Miami International Airport and 13.0 miles west of the Downtown Miami CBD in Sweetwater, Florida. The collateral was delivered to market in 2001 and is considered one of the highest volume shopping centers in the United States, with Net Rental Income consistently exceeding $100.0 million since 2022. The trust loan will go to refinance existing debt that was previously securitized in the Taubman Centers Commercial Mortgage Trust 2022-DPM transaction.

The collateral is generally considered to be Miami's largest outlet center, featuring a diverse roster of national outlet brands, big box retails, restaurants, and entertainment offerings. The collateral's diverse roster of anchor tenants includes Bass Pro Shops, Polo Ralph Lauren Factory Store, Dave & Buster's, Saks OFF Fifth, Burlington, Ross Dress for Less, Nike Factory Store, Old Navy, Marshalls, Bowlero, and Cobb Theatres. Vivo!, a dining and entertainment venue anchored by Sports & Social, opened in June 2023. Vivo! is a gathering space for live music, sports viewing, festivals, and community events, with 31,960 sf of existing interior space, and approximately 30,000 sf of outdoor space.

The collateral has evidenced favorably stable occupancy trends in recent years, with year-end occupancy averaging 95.1% between 2020 and 2023 and propertywide occupancy never falling below 92.0% in the last seven years despite store closures related to the ongoing coronavirus pandemic. The collateral's diverse roster of modestly priced national retailers and proximity to Miami International Airport provide a competitive advantage over the collateral's appraisal-identified competitive set for attracting demand from international tourism. While the appraisal defines the collateral's trade area as the area encompassing a 7.0-mile radius around the property, approximately 40.0% to 50.0% of the collateral's sales have historically been generated from tourist-related activities with a particular draw of international visitors from South America. At the time of Morningstar DBRS' inspection, representatives of the collateral's on-site management team also suggested that the collateral was benefiting from increased foot traffic from its local trade area since the onset of the pandemic.

The property's comparable inline sales of $940 per square foot (psf) in the 12-month (T-12) period ended September 30, 2024, represent a 0.5% decline in comparable in-line sales from 2022; however, comparable in-line sales have increased 2.8% since 2023. On the other hand, overall sales volume has increased to $861.4 million in the T-12 period ended September 30, 2024, continuing an increasing trend in sales from 2022 when sales were approximately $783.1 million, representing a 10.0% increase in overall sales volume, and a 3.6% increase from 2023.

Considering the collateral's favorable location, generally consistent occupancy trends, evidence of recovering in-line sales, strong sponsorship, and ongoing transformation, Morningstar DBRS has a generally positive view of the credit characteristics of the collateral. Nonetheless, like most regional malls, the collateral will likely continue to contend with secular headwinds facing brick-and-mortar retailers in the long run, and the proliferation of e-commerce continues to gain traction globally.

Morningstar DBRS' credit rating on the Certificates addresses 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 rating does not address non-payment 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, or 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) 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 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.

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 rating assigned or may be discontinued. The assignment of final credit ratings on the above-mentioned securities is 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.

-- 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
-- Legal Criteria for U.S. Structured Finance (December 3, 2024),
https://dbrs.morningstar.com/research/444064

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