Press Release

Morningstar DBRS Confirms Credit Ratings on All Classes of J.P. Morgan Chase Commercial Mortgage Securities Trust 2021-1MEM

CMBS
June 18, 2025

DBRS Limited (Morningstar DBRS) confirmed its credit ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2021-1MEM issued by J.P. Morgan Chase Commercial Mortgage Securities Trust 2021-1MEM as follows:

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

Morningstar DBRS maintained Negative trends on all Classes.

The credit rating confirmations reflect Morningstar DBRS' outlook on the transaction, which is unchanged since last review, as collateral performance remains in line with expectations. During its previous review in July 2024, Morningstar DBRS downgraded its credit ratings on Classes C, D, E, and HRR as a result of the downward pressure implied by the loan-to-value (LTV) sizing benchmarks following updates to the Morningstar DBRS analysis. These updates were made to capture the observed secular shift in use and demand for office space, as well as the upcoming departure of the largest tenant at the collateral property, InterSystems Corporation (InterSystems; 58.5% of net rentable area (NRA)), which will vacate its space in June 2025. The implied LTV is based on the updated Morningstar DBRS value of $388.2 million, and the trust debt is 106.7%.

As InterSystems has yet to vacate the property, occupancy remains unchanged at 98.5%, per the March 2025 rent roll. The loan structure provides for a cash flow sweep to be initiated in certain circumstances involving the InterSystems lease, which was activated in December 2023. InterSystems was required to pay a termination fee, which together with the cash flow sweep, amounts to $55.4 million per the June 2025 reporting. This is primarily as a result of the fees collected as part of from InterSystems' termination option, which have nearly doubled since last review to $22.7 million. While this is a positive development, Morningstar DBRS continues to view the execution risk of such a large lease-up as significant, particularly in the current environment. The property, however, benefits from its location adjacent to the Massachusetts Institute of Technology (MIT) campus and institutional sponsorship, which appears committed to retenanting the building. Only one lease (6.2% of NRA) has been signed in the 18 months since InterSystems' notice of termination, with no other prospective tenants known to the servicer as of the date of this press release. Given the unknowns regarding the leasing momentum and general demand for the space to be vacated, Morningstar DBRS has maintained Negative trends on all classes.

The collateral for the underlying loan is One Memorial Drive, a Class A, 17-story office building totaling 409,422 square feet (sf) adjacent to the MIT campus in Cambridge, Massachusetts. The property includes a five-story, approximately 300-stall parking garage, and amenities include a fitness center, full-service cafe, on-site Blue Bike station, electric vehicle chargers, and bike storage. The property was built in 1985 and renovated in 2018, with approximately $49.0 million spent on capital improvements, including elevator modernizations, HVAC upgrades, roof replacements, and tenant improvements for the two largest tenants. Sponsorship is provided by Metropolitan Life Insurance Company and Norges Bank Investment Management.

Whole-loan proceeds of $414.0 million include six pari passu senior notes with an aggregate initial principal balance of $299.3 million and one junior note with an initial principal balance of $114.7 million. The subject transaction totals $255.8 million and consists of one senior note with a principal balance of $141.5 million and the junior note. The remaining notes are securitized in the BMARK 2021-B30 ($95.0 million) and BMARK 2021-B31 ($63.2 million) transactions, neither of which are rated by Morningstar DBRS. The loan is interest-only (IO) throughout its 10-year term with a scheduled maturity in October 2031.

The second largest tenant is Microsoft Corporation (Microsoft; 38.3% of NRA; lease expiration in June 2028), which has been in occupancy since 2007 and has one 10-year extension option remaining. The tenant has no termination options available. Collectively, InterSystems and Microsoft represent 96.7% of the NRA. As noted above, the borrower has signed one lease with MIT for the entire second floor (25,298 sf) on a 10-year term beginning January 2026. The tenant will pay an initial rate of $96.00 per square foot (psf), significantly higher than the market rate InterSystems is currently paying at $76.25 psf. MIT will receive 10 months of free rent and a tenant improvement package of $120.00 psf. According to Q1 2025 Reis data, office properties in the Cambridge/Charlestown/Somerville submarket reported an average asking rental rate of $59.50 psf with vacancy at 11.9%, a minimal change since Q1 2024. Coinciding with InterSystem's departure, 213,000 sf of space is currently listed as available on the property's website.

As of YE2024, the loan reported a net cash flow (NCF) of $30.7 million (a debt service coverage ratio of 2.72 times), in line with historical reporting. In its analysis for this review, Morningstar DBRS maintained the stabilized NCF of $25.2 million derived at last review, which considered the departure of InterSystems and gave credit to the expected sum of reserves upon its departure, re-leasing the space to market, less the associated MIT leasing costs. Using a 6.5% capitalization rate, which was in line with other assets in the market, Morningstar DBRS determined a stabilized value of $388.2 million, reflecting a haircut of 53.1% from the issuance value of $828.0 million. Morningstar DBRS maintained positive qualitative adjustments to the LTV sizing benchmarks totaling 5.0%, to reflect the desirable property quality and location along the MIT campus within a strong submarket. The Morningstar DBRS value and implied LTV result in moderate downward pressure across the capital stack, further supporting the Negative trends as outlined above.

The Morningstar DBRS credit ratings assigned to Classes A, B, C, and E are higher than the results implied by the LTV sizing benchmarks. These variances are warranted given the loan structure, as termination fees and cash sweep have collected sufficient funds to re-lease the property, coupled with the property's location adjacent the MIT campus in a strong market characterized by low vacancy and limited construction of new product, and an institutional loan sponsor that appears committed to re-tenanting the property.

In addition, the updated Morningstar DBRS value indicates that the debt service coverage would remain above breakeven for the investment-grade rated classes, should leasing momentum continue to be slow. Morningstar DBRS also considered a dark value in excess of $390.0 million, which suggests a recovery for those same classes should the loan default and the servicer ultimately liquidate the asset; however, Morningstar DBRS maintained Negative trends on these classes, given the increase risks from issuance and will continue to monitor the leasing progress.

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 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 (May 16, 2025) at https://dbrs.morningstar.com/research/454196.

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 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.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS' outlooks and credit ratings are monitored.

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 600
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: 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.

Ratings

J.P. Morgan Chase Commercial Mortgage Securities Trust 2021-1MEM
  • Date Issued:Jun 18, 2025
  • Rating Action:Confirmed
  • Ratings:AAA (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jun 18, 2025
  • Rating Action:Confirmed
  • Ratings:AAA (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jun 18, 2025
  • Rating Action:Confirmed
  • Ratings:AA (low) (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jun 18, 2025
  • Rating Action:Confirmed
  • Ratings:BBB (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jun 18, 2025
  • Rating Action:Confirmed
  • Ratings:BB (low) (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jun 18, 2025
  • Rating Action:Confirmed
  • Ratings:B (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jun 18, 2025
  • Rating Action:Confirmed
  • Ratings:B (low) (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:CA
  • US = Lead Analyst based in USA
  • CA = Lead Analyst based in Canada
  • EU = Lead Analyst based in EU
  • UK = Lead Analyst based in UK
  • E = EU endorsed
  • U = UK endorsed
  • Unsolicited Participating With Access
  • Unsolicited Participating Without Access
  • Unsolicited Non-participating

ALL MORNINGSTAR DBRS RATINGS ARE SUBJECT TO DISCLAIMERS AND CERTAIN LIMITATIONS. PLEASE READ THESE DISCLAIMERS AND LIMITATIONS AND ADDITIONAL INFORMATION REGARDING MORNINGSTAR DBRS RATINGS, INCLUDING DEFINITIONS, POLICIES, RATING SCALES AND METHODOLOGIES.