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

DBRS, Inc. (Morningstar DBRS) confirmed its credit ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2020-1MW issued by Manhattan West 2020-1MW Mortgage Trust as follows:

-- 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 credit rating confirmations reflect the stable to improving performance of the transaction, which has remained in line with Morningstar DBRS' expectations since issuance. The subject property has maintained strong occupancy of near 100%, highlighted by a high concentration of long-term investment-grade tenants.

The transaction is collateralized by a trophy 70-story Class A office building in the Hudson Yards submarket of Manhattan. 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. 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.

The seven-year loan pays a fixed-rate interest of 2.341% on an interest-only (IO) basis through the September 2027 maturity of the loan. The asset benefits from long-term, institutional-grade tenancy. Additionally, none of the current leases roll during the loan term, and the existing tenants have contractual rent increases built throughout their respective lease terms. The earliest scheduled lease expiration of any of the major tenants (Skadden, Arps, Slate, Meagher, & Flom LLP (Skadden); Ernst & Young (E&Y); Accenture; the National Hockey League; and McKool Smith), 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 slightly above 70% of base rent.

According to the September 2024 rent roll, the property had a physical occupancy rate of 99.8% with an average rental rate of $94.44 per square foot (psf), which has increased since issuance from realized rent steps. According to the September 2024 T-9 financials, the annualized net cash flow (NCF) and debt service coverage ratio (DSCR) were $128.7 million and 3.60 times (x), respectively, compared with $119.0 million and 3.34x, respectively, at YE2023 and the Morningstar DBRS figures of $106.4 million and 2.99x, respectively, reflecting overall healthy performance metrics.

The April 2024 Morningstar DBRS credit rating analysis and action included an update to the Morningstar DBRS value. For more information regarding the approach and analysis conducted, please refer to the press release titled "Morningstar DBRS Takes Rating Actions on North American Single-Asset/Single-Borrower Transactions Backed by Office Properties," published on April 15, 2024. In the analysis for this review, Morningstar DBRS maintained the capitalization rate of 6.25% and the Morningstar DBRS NCF of $106.4 million. Morningstar DBRS also maintained positive qualitative adjustments to the LTV Sizing benchmarks totaling 10.75% to reflect the subject property's quality and long-term, in-place tenancy to investment-grade tenants. The Morningstar DBRS concluded value of $1.7 billion represents a -32.6% variance from the issuance appraised value of $2.5 billion, implying a whole-loan loan-to-value ratio of 105.7%.

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 credit 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), https://dbrs.morningstar.com/research/437781.

Class X is an 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 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 (February 28, 2025), https://dbrs.morningstar.com/research/448963.

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

The credit ratings were 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.

These are solicited 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 Single-Asset/Single-Borrower Ratings Methodology (February 28, 2025), https://dbrs.morningstar.com/research/448962
-- 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
-- North American Commercial Mortgage Servicer Rankings (August 23, 2024), https://dbrs.morningstar.com/research/438283

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