Morningstar DBRS Confirms Credit Ratings on All Classes of CAMB 2021-CX2

DBRS Limited (Morningstar DBRS) confirmed its credit ratings on all classes of Commercial Mortgage Pass-Through Certificates issued by CAMB 2021-CX2 Mortgage Trust as follows:

-- Class A at AAA (sf)
-- Class X at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class HRR at BB (high) (sf)

All trends are Stable.

The credit rating confirmations reflect the overall stable performance of the transaction, which has remained in line with expectations since the previous Morningstar DBRS credit rating action in April 2024. The collateral office buildings are 100% occupied by Aventis, Inc. (Aventis), a wholly owned subsidiary of the French healthcare conglomerate Sanofi, on long-term leases that run through 2036.

The underlying loan is secured by the borrower's simple interest in 350 Water Street and 450 Water Street, two recently constructed, Class A, LEED Gold certified, life-sciences office buildings totaling 916,233 square feet (sf) in Cambridge, Massachusetts. The collateral properties are part of the Cambridge Crossing Development (CX), a large master-planned urban district developed by the sponsor, DivcoWest, which has delivered more than 2.1 million sf of science and technology space. The community also features a diverse range of retail space, restaurants, and residential space.

The $1.2 billion whole loan consists of $814.0 million of senior debt and $411.0 million of junior debt. The entirety of the junior debt and $285.0 million of the senior debt are secured in the subject transaction. The remaining $529.0 million of senior debt was placed across several commercial mortgage-backed securities transactions, including BANK 2022-BNK39, which is rated by Morningstar DBRS. The fixed rate interest-only (IO) loan features an anticipated repayment date in November 2031 and final loan maturity date in November 2036.

The collateral serves as the headquarters for Aventis, which fully occupies both buildings on two 15-year triple-net leases that are co-terminous with the loan's final maturity date in November 2036. At issuance, the final buildout for the Aventis space was ongoing, with lease commencement dates in July 2021 and October 2021. The final construction of the tenant's space was completed by the middle of 2022. Aventis is paying an average rental rate of $76.27 per square foot, per the September 2024 rent roll, and is subject to 2.5% annual rent escalations, with two 10-year renewal options at fair market value. Both leases are guaranteed by the parent company, Sanofi, which is rated investment-grade by Moody's and S&P Global Ratings. The tenant has a termination option that is exercisable in the 14th lease year (2034) and is subject to a termination fee equal to 12 months of rent, operating expenses, and taxes.

According to the Q3 2024 financials, the collateral reported an annualized consolidated net cash flow (NCF) figure of $80.2 million and a debt service coverage ratio (DSCR) of 2.30 times, which is in line with the Morningstar DBRS NCF of $77.6 million derived at issuance. The Morningstar DBRS NCF figure reflects the long-term credit tenant treatment for Aventis, with straight-lined rents reflecting rent steps over the loan term, and no leasing costs assumed for the space. The improved reported NCF growth over the Morningstar DBRS NCF figure is largely the result of a higher expense recovery ratio over the past few years.

For this review, Morningstar DBRS maintained the valuation approach from the April 2024 review, when Morningstar DBRS updated its value for the collateral buildings from the issuance analysis to reflect an increased capitalization (cap) rate of 6.75% from the issuance Morningstar DBRS cap rate of 6.5%. The Morningstar DBRS NCF of $77.6 million was maintained from issuance, and the resulting Morningstar DBRS value was $1.15 billion, representing a -41.18% variance from the issuance appraised value of $1.95 billion and indicative of a whole loan-to-value ratio (LTV) of 106.6%. Morningstar DBRS also maintained positive qualitative adjustments totaling 9.5% to reflect the presence of a long-term tenant, strong property quality, and its location within a strong market. Morningstar DBRS expects performance will continue to be stable to improving given the stable tenancy and strong, experienced institutional sponsorship in the form of a joint venture partnership among DivcoWest, the California State Teachers Retirement System, and Teacher Retirement System of Texas.

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 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 (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 related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info-DBRS@morningstar.com.

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 Limited
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Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577

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.

A description of how Morningstar DBRS analyzes structured finance transactions and how the methodologies are collectively applied can be found at (July 17, 2023): https://dbrs.morningstar.com/research/417279.

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