Morningstar DBRS Confirms Credit Ratings on CRSNT Trust 2021-MOON

DBRS Inc (Morningstar DBRS) confirmed its credit ratings on the following classes of the Commercial Mortgage Pass-Through Certificates, Series 2021-MOON issued by CRSNT Trust 2021-MOON:

-- Class A Notes at AAA (sf)
-- Class A-Y Notes at AAA (sf)
-- Class A-Z Notes at AAA (sf)
-- Class A-IO Notes at AAA (sf)
-- Class X-NCP Notes at AAA (sf)
-- Class B Notes at AA (low) (sf)
-- Class C Notes at A (low) (sf)
-- Class D Notes at BB (high) (sf)
-- Class E Notes at B (high) (sf)
-- Class F Notes at B (low) (sf)

All trends are Stable.

The credit rating confirmations reflect the overall consistent performance of the underlying collateral since the previous Morningstar DBRS credit rating action in April 2024, as evidenced by the stable occupancy rate and increased net cash flow (NCF). According to Q2 2024 servicer reporting, the trailing 12-month (T-12) ended June 30, 2024, NCF of $50.3 million represented a 14.5% improvement over the year-end (YE) 2023 NCF of $43.9 million.

The $465.0 million trust loan, which is accompanied by a $60.0 million mezzanine loan (held outside of the trust), is secured by the borrower's fee-simple interest in a 1.3 million-square-foot (sf) Class A+ office/retail building known as the Crescent in the Uptown/Turtle Creek submarket of Dallas. Building amenities include on-site restaurants, a deli, a fitness center, a conference center, garage parking, concierge services, on-site security, and an outdoor terrace. The property is part of a larger mixed-use development project that includes The Crescent Hotel, a 226-key luxury hotel, which is not a part of the collateral. The loan sponsor is Crescent Real Estate LLC, a real estate operating company and investment advisor, which had approximately $4.5 billion in assets under management as of February 2024.

The floating-rate loan has an upcoming maturity date in April 2025 after the borrower exercised the first of up to two 12-month extension options after the initial three-year term. Morningstar DBRS has made an inquiry to the servicer regarding the borrower's intention to exercise the final extension option with a response currently pending. If the borrower does exercise the extension option, it will be required to purchase an interest rate cap agreement with a strike rate resulting in a minimum debt service coverage ratio (DSCR) of 1.10 times (x) on the senior debt based on current property operations.

As noted above the T-12 NCF was $50.3 million, resulting in a DSCR of 1.41x. The figure which is above the YE2023 figure of $43.9 million (DSCR of 1.31x), but notably higher than the YE2022 and Morningstar DBRS figures of $36.7 million (DSCR of 2.17x) and $31.1 million (DSCR of 2.98x), respectively.

Occupancy has remained relatively flat for the past few years, with the property reporting a 93.8% occupancy rate, according to the February 2025 rent roll. The figure is similar with the YE2023 and YE2022 figures of 96.0% and 94.0%, respectively, but above the occupancy rate at issuance of 87.0%. The property benefits from a largely granular rent roll, with the largest tenant, Weil Gotshal & Manges LLP, representing 5.2% of net rentable area (NRA) on a lease scheduled to expire in July 2028. Tenant rollover risk in the next 12 months includes 20 tenants occupying 9.6% of NRA. According to the February 2025 rent roll, the property has a base average rental rate of $36.30 per square foot (psf) compared with the issuance figure of $27.30 psf. According to Reis, office properties in the Uptown submarket of Dallas had a Q4 2024 vacancy rate of 24.9%, an asking rental rate of $42.34 psf gross, and an effective rent of $32.06 psf gross.

At the previous Morningstar DBRS credit rating action in April 2024, Morningstar DBRS completed an updated collateral valuation. For more information regarding the approach and analysis conducted, please refer to the press release titled "Morningstar DBRS Takes Actions on North American Single-Asset/Single-Borrower Transactions Backed by Office Properties," published on April 15, 2024. Given the stable performance of the collateral over the last year, for the purposes of this review, Morningstar DBRS maintained its property valuation of $415.3 million based on a 7.5% cap rate on the Morningstar DBRS NCF of $31.1 million. The implied loan-to-value ratio is 112.0% on the trust loan of $465.0 million and 126.4% on the outstanding whole loan balance of $525.0 million. Qualitative adjustments, totaling 3.5% for cash flow volatility, property quality, and market fundamentals were applied to account for low cash flow volatility amidst the positively trending NCF, the quality of the improvements, and market fundamentals.

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 factor(s) 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

Classes A-IO 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 Morningstar DBRS.

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

The principal methodology is the 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 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 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 03, 2024): https://dbrs.morningstar.com/research/444064
-- Interest Rate Stresses for U.S. Structured Finance Transactions (February 26, 2024): https://dbrs.morningstar.com/research/428623
-- 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.