Morningstar DBRS Assigns Provisional Credit Ratings to GSAT Trust 2025-BMF

DBRS, Inc. (Morningstar DBRS) assigned provisional credit ratings to the following classes of Commercial Mortgage Pass-Through Certificates, Series 2025-BMF (the Certificates) to be issued by GSAT Trust 2025-BMF (the Trust):

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

All trends are Stable.

The Trust is secured by the borrower's fee-simple interest in a portfolio of seven Class A and B garden-style multifamily properties totaling 2,381 market-rate units located across the Louisville, Kentucky, Atlanta, Nashville, Carmel, Indiana, and Cincinnati markets. Transaction proceeds of $330.0 million will go toward refinancing $237.1 million of debt across the portfolio, cashing out $85.4 million to the borrower, covering an anticipated prepayment penalty of $941,401, and covering closing costs. The sponsor developed four of the assets between 1999 and 2020 and acquired the remaining assets in several transactions between August 2018 and January 2020 for a total cost basis of $386.7 million.

The portfolio assets are generally stabilized and in good condition. All seven properties have many amenities, with all properties offering clubhouses and fitness centers, and four of the seven offering swimming pools. The WA year built of the portfolio is 1997, with no property built before 1982. Five of the seven properties, totaling 1,754 units, were constructed prior to 2002. Since 2018, the borrower has successfully completed unit renovations on the majority of units and common areas at the more dated properties in the portfolio. Excluding the Nashville assets, Whetstone Flats I & II, which were built in 2016 and 2020, respectively, the borrower has renovated 79.6% of units, inclusive of 45 units renovated by prior ownership. Cost per renovated unit averaged $16,506, and total capex spend per unit across the entire portfolio averages $19,362, including both unit renovations and other capex. Across the five properties that have undergone unit renovations, average rent premiums of $165 or 13.7% per unit have been achieved thus far. The borrower's considerable investment in improving properties in the portfolio evidences its commitment to the portfolio.

As of the May 2025 rent roll, the portfolio was 93.5 % occupied with an average rent of $1,499 per unit. The properties are in suburban areas of their respective markets, generally about 15 to 20 minutes outside of downtown central business districts (CBDs). The portfolio has exhibited consistent rent growth year over year since 2019, bolstered by the borrower's renovations across the portfolio. Despite a track record of rent growth, Morningstar DBRS notes the portfolio net operating income (NOI) dipped in 2024 and T-12 ended March 2025 periods because of elevated concessions and expenses on the portfolio level. The concessions, which are concentrated at the Nashville assets, are serving as a means to preserve occupancy and maintain the properties' competitive positions in the market as new supply in the immediate areas reaches stable occupancy and allows concession to burn off.

The generally favorable market conditions are evidenced by relatively tight submarket vacancy rates, which, by vintage, averaged 5.4% across the portfolio in Q1 2025, per Reis. All of the properties have a Morningstar DBRS Market Rank of 3 or 5, designations assigned to more suburban locations. These suburban markets are quite popular as shown by CBRE's local demographics data. The three-mile radius surrounding each property demonstrated strong population growth between 2020 and 2024, averaging annual growth of 1.7% across the portfolio, which is 2.8x higher than the U.S. average per census data. Further, the three-mile radius average median income is $88,912, more than 10% higher than the U.S. median household income. The portfolio is generally in statistically desirable markets across the U.S., positioning it well to continue to attract renters in the near term.

The Morningstar DBRS Loan-To-Value (LTV) on the full debt load of $330.0 million is high at 103.2%. To account for the high leverage, Morningstar DBRS programmatically reduced its LTV benchmark targets for the transaction by 1.50% across the capital structure. The high leverage point combined with a lack of scheduled amortization pose potentially elevated refinance risk at loan maturity in the event that the appraised values do not remain stable. Furthermore, the Morningstar DBRS Net Cash Flow (NCF) of $22.8 million results in a Morningstar DBRS Debt Service Coverage Ratio (DSCR) of 1.03 times (x), indicating any cash flow decline or disruption of operations within the portfolio puts the overall portfolio at risk of not being able to service its debt service payments as they come due. Morningstar DBRS took a conservative approach in its cash flow analysis, which includes no rental rate appreciation over the course of the loan term, elevated economic vacancy conclusions, and elevated operating expenses when compared against the Issuer's cash flow figure.

The sponsor for the mortgage loan is Buckingham Multifamily Fund I, LP, Buckingham Companies' (Buckingham) flagship value-add fund. Buckingham is a full-service, vertically integrated real estate company founded more than 40 years ago. Buckingham currently manages a portfolio valued at more than $3.0 billion. Buckingham has other experience in the same submarkets as the portfolio and developed four of the seven subject assets, representing 47.3% of the collateral portfolio unit count. In the subject financing, the sponsor will cash out approximately $85.4 million, 25.9% of the total loan amount. Based on the appraised value of $482,450,000, the sponsor will still have approximately $157.0 million of implied equity remaining.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS   
ESG Considerations had a relevant effect on the credit analysis.

Environmental (E) Factors  
The following Environmental factor had a relevant effect on the credit analysis: The Environmental Site Assessments identified several Business Environmental Risks across the portfolio with an estimated total remediation cost of $81,670. As a mitigant, Morningstar DBRS deducted this amount from its value estimate for the portfolio. Morningstar DBRS considered the environmental remediation expense a relevant environmental ESG factor.

There were no 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 Ratings (May 16, 2025): 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 Single-Asset/Single-Borrower Ratings Methodology (February 28, 2025): https://dbrs.morningstar.com/research/448962

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.

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]

A provisional credit rating is not a final credit rating with respect to the above-mentioned securities and may change or be different than the final credit rating assigned or may be discontinued. The assignment of final credit ratings on the above-mentioned securities is subject to receipt by Morningstar DBRS of all data and/or information and final documentation that Morningstar DBRS deems necessary to finalize the 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.

Morningstar DBRS North American Commercial Mortgage Servicer Rankings (August 23, 2024):
https://dbrs.morningstar.com/research/438283

Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (September 19, 2024):
https://dbrs.morningstar.com/research/439702

Morningstar DBRS Legal Criteria for U.S. Structured Finance (December 3, 2024):
https://dbrs.morningstar.com/research/444064

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