Morningstar DBRS Confirms Credit Ratings on All Classes of BDS 2021-FL10 Ltd.

DBRS Limited (Morningstar DBRS) confirmed its credit ratings on all the classes of notes issued by BDS 2021-FL10 Ltd. as follows:

-- Class A Notes at AAA (sf)
-- Class A-S Notes at AAA (sf)
-- Class B Notes at AA (high) (sf)
-- Class C Notes at A (high) (sf)
-- Class D Notes at A (sf)
-- Class E Notes at BBB (sf)
-- Class F Notes at BB (sf)
-- Class G Notes at B (high) (sf)

All trends are Stable.

The credit rating confirmations reflect the transaction's favorable collateral composition as the trust continues to be primarily secured by multifamily collateral, with minimal changes since Morningstar DBRS' last credit rating action in May 2025, which resulted in upgrades across the Class B through G Notes stemming from loan collateral reduction totaling 27.9% since issuance. Historically, loans secured by multifamily properties have exhibited lower default rates and the ability to retain and increase asset value. Additionally, the majority of individual borrowers are progressing the stated business plans to increase property cash flow asset value. In conjunction with this press release, Morningstar DBRS has published a Surveillance Performance Update report with in-depth analysis and credit metrics for the transaction and with business plan updates on select loans. For access to this report, please click on the link under Related Documents below or contact us at info-DBRS@morningstar.com.

The transaction closed in December 2021 with an initial collateral pool of 32 short-term, floating-rate mortgage loans secured by 35 mostly transitional properties with a cut-off date balance of $932.1 million. Most of the loans were in a period of transition with plans to stabilize and improve asset value. The transaction was structured with a Reinvestment Period that expired with the November 2023 Payment Date. As of the May 2025 remittance, the pool comprised 26 loans secured by 27 properties with a cumulative trust balance of $888.2 million. Since issuance, 21 loans with a cumulative trust balance of $535.5 million have been paid in full.

The transaction benefits from a significant concentration of loans backed by multifamily properties, representing 92.8% of the current trust balance. The remaining assets are concentrated by industrial, manufactured housing, and hotel properties. The loans are primarily secured by properties in suburban markets with 23 loans, representing 89.7% of the current trust balance, in locations with Morningstar DBRS Market Ranks of 3, 4, and 5. Three loans, representing 10.3% of the pool, are secured by properties in tertiary markets, as defined by Morningstar DBRS, with a Morningstar DBRS Market Rank of 2. Morningstar DBRS recognizes that select property values may be inflated as the majority of the individual property appraisals were completed in 2021 and may not reflect the current environment of rising interest rates or widening capitalization rates faced by borrowers and lenders. In its analysis, Morningstar DBRS applied upward loan-to-value adjustments across 14 loans, representing 66.1% of the current trust balance.

Through June 2025, the lender advanced a cumulative $78.1 million in loan future funding allocated to 20 individual borrowers to aid in property stabilization efforts. The largest advance of $26.7 million was made to the borrower of American Steel Collection (4.4% of the current pool balance), which is secured by a portfolio of four industrial properties in Oakland, California. The borrower's business plan focuses on increasing occupancy and rental rates to market levels by completing approximately $35.2 million in capital expenditures. An additional $13.5 million of loan future funding allocated to three individual borrowers remains available. The largest unadvanced portion of $8.5 million is allocated to the borrower of the aforementioned American Steel Collection. In addition to this loan, Morningstar DBRS identified a number of loans that are lagging in their original business plans. Morningstar DBRS' analysis includes additional adjustments to the loan-level probability of default for these assets to reflect these concerns.

Seventeen of the outstanding loans, representing 64.0% of the current trust balance, are scheduled to mature by YE2025; however, almost all of the loans have remaining extension options. While required performance tests may not be met across all collateral properties, borrowers and lenders may negotiate loan modifications to extend maturity dates, if necessary. Any loan modifications would likely require additional equity infusions from borrowers in the form of principal curtailments, the purchase of new interest rate cap agreements, or deposits into existing reserve accounts. As of May 2025, there were no loans in special servicing while 18 loans were being monitored on the servicer's watchlist, representing 71.5% of the current trust balance. Twelve of these loans are being monitored primarily for upcoming maturities, with the remaining loans being flagged for deferred maintenance items and/or performance-related concerns as the borrowers execute their business plans. Occupancy rates and cash flow may remain depressed at select properties as the borrowers work toward property stabilization.

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.

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 rating assigned to the Class C Notes materially deviates from the credit rating implied by the predictive model. Morningstar DBRS typically expects there to be a substantial likelihood that a reasonable investor or other user of the credit rating would consider a three-notch or more deviation from the credit rating stress(es) implied by the predictive model to be a significant factor in evaluating the credit rating. The rationale for the material deviation is that the structural features (loan or transaction) and/or provisions in other relevant methodologies outweigh the quantitative model output

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.

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 CMBS Multi-Borrower Rating Methodology (April 9, 2025)/North American CMBS Insight Model v. 1.3.0.0, https://dbrs.morningstar.com/research/451739
-- 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.