Press Release

Morningstar DBRS Confirms Credit Ratings on All Classes of DROP Mortgage Trust 2021-FILE

CMBS
July 02, 2025

DBRS, Inc. (Morningstar DBRS) confirms the credit ratings on the Commercial Mortgage Pass-Through Certificates, Series 2021-FILE issued by DROP Mortgage Trust 2021-FILE as follows:

-- Class A at AA (sf)
-- Class A-IO at AA (sf)
-- Class A-Y at AA (sf)
-- Class A-Z at AA (sf)
-- Class B at BBB (sf)
-- Class C at BB (sf)
-- Class X-NCP at B (high) (sf)
-- Class D at B (sf)
-- Class E at CCC (sf)
-- Class HRR at CCC (sf)

The trends on all classes remain Negative except for Classes E and HRR, which have credit ratings that do not typically carry trends in commercial mortgage-backed securities (CMBS).

The Negative trends reflect the retraction in net cash flow (NCF) after a major tenant, Dropbox Inc. (Dropbox; 98.4% of the net rentable area (NRA) at issuance) relinquished space pursuant to agreed-upon termination fees in a lease amendment, as Morningstar DBRS expected at the last credit rating action in July 2024. As part of the termination, Dropbox surrendered approximately 300,000 square feet (sf) of its original footprint of approximately 738,000 sf, which it was set to relinquish in three phases between 2023 and 2025, in exchange for a termination fee of $79.0 million. The YE2024 occupancy rate and NCF declined to 85.4% and $50.6 million with a debt service coverage ratio (DSCR) of 1.31 times (x), down from the YE2023 figures of 92.6% and $55.3 million with a DSCR of 1.15x. As of June 2025, the servicer reported a reserve balance of $71.8 million for the loan, which includes termination fees associated with each of the space givebacks, including the final space giveback that occurred in the first half of 2025.

The subject transaction's underlying mortgage is collateralized by the borrower's fee-simple interest in a 750,370-sf office building now rebranded to Icona: Labs at Mission Bay (formerly The Exchange) in the Mission Bay submarket of San Francisco. The floating-rate loan is interest only (IO) and is structured with an anticipated repayment date (ARD) in April 2026 with 10 successive one-year extension options and one six-month option for a final maturity date in October 2033, one month before Dropbox's lease expiration. In addition to penalty interest due on the mortgage after the ARD, the loan will hyperamortize and all available excess cash flow will be applied to pay down the loan; however, Morningstar DBRS notes that, in the absence of leasing activity to replace the footprint left by Dropbox, excess cash flow will likely be unavailable. Nevertheless, Morningstar DBRS also notes the significant reserves held following Dropbox's downsizing. Although the terms of the loan do not allow for the Dropbox termination funds being held to be applied to leasing costs or to pay down the loan balance outside a trigger period (which would result from the loan not repaying at the ARD, among other instances) or a default scenario, the funds may be used to cover lost revenues and to pay debt service in the event of a shortfall.

The collateral asset was completed in 2018 and is LEED Platinum certified. Of the former Dropbox space, 133,896 sf (17.8% of the NRA) was converted to a direct lease with former sublease tenant, Vir Biotechnology, through December 2033. The remaining approximately 165,000 sf formerly leased by Dropbox is still vacant. As of the YE2024 rent roll, the property was 85.4% occupied, with no significant rollover in the near term; when accounting for the third and final phase of Dropbox's downsizing in 2025, the property's occupancy rate falls to 76.6%. All leases in place are scheduled to expire within three months of the loan's fully extended maturity date in October 2033. While the borrower continues to market the vacant spaces at the property, which benefits from its superior quality and desirable location, no leases have been successfully executed over the past couple of years, highlighting the challenged leasing environment in the submarket.

At the previous review in July 2024, Morningstar DBRS downgraded its credit ratings on all classes to reflect the increased credit risks associated with downward pressure in the loan-to-value (LTV) sizing benchmarks following updates to the Morningstar DBRS Value for the collateral property. As part of the updated Morningstar DBRS Value, Morningstar DBRS derived an updated NCF of $34.5 million, which treated all of Dropbox's non-subleased giveback space as vacant; an office market rent of $66 per sf; and a vacancy rate of 21.2%. Morningstar DBRS applied a capitalization rate of 7.5%, resulting in a Morningstar DBRS Value of $460.1 million, which represents a LTV ratio of 130.4%. Morningstar DBRS maintained the value it derived at the July 2024 review in its analysis for this credit rating action.

The credit ratings on Class A through Class D are higher than the results implied by the LTV sizing benchmarks. The variances are warranted given structural features which outweigh the quantitative model output and uncertain loan-level event risk. As noted above, deposits related to Dropbox's termination have resulted in the reserve balance increasing to more than $70 million as of the June 2025 reporting. Although these funds cannot be applied toward re-tenanting the space, they may offset rent interruptions or serve as added collateral if the loan defaults. In addition, the high property quality and location of the asset proximate to several large hubs, including UCSF's Mission Bay campus and medical center as well as the Kaiser Permanente campus, are mitigating factors that Morningstar DBRS considered in its analysis for this review.

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 at Environmental, Social, and Governance Factors in Credit Ratings (May 16, 2025) at https://dbrs.morningstar.com/research/454196.

Class X-NCP is an interest-only (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 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. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The Morningstar DBRS Long-Term Obligation Rating Scale definition indicates that credit ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

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, 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 3, 2024),
https://dbrs.morningstar.com/research/444064
-- Interest Rate Stresses for U.S. Structured Finance Transactions (March 27, 2025),
https://dbrs.morningstar.com/research/450750
-- 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.

Ratings

  • Date IssuedDebt RatedRatingTrendActionAttributesi
    02-Jul-25Commercial Mortgage Pass-Through Certificates, Series 2021-FILE, Class AAA (sf)NegConfirmed
    US
    02-Jul-25Commercial Mortgage Pass-Through Certificates, Series 2021-FILE, Class A-IOAA (sf)NegConfirmed
    US
    02-Jul-25Commercial Mortgage Pass-Through Certificates, Series 2021-FILE, Class A-YAA (sf)NegConfirmed
    US
    02-Jul-25Commercial Mortgage Pass-Through Certificates, Series 2021-FILE, Class A-ZAA (sf)NegConfirmed
    US
    02-Jul-25Commercial Mortgage Pass-Through Certificates, Series 2021-FILE, Class BBBB (sf)NegConfirmed
    US
    02-Jul-25Commercial Mortgage Pass-Through Certificates, Series 2021-FILE, Class CBB (sf)NegConfirmed
    US
    02-Jul-25Commercial Mortgage Pass-Through Certificates, Series 2021-FILE, Class X-NCPB (high) (sf)NegConfirmed
    US
    02-Jul-25Commercial Mortgage Pass-Through Certificates, Series 2021-FILE, Class DB (sf)NegConfirmed
    US
    02-Jul-25Commercial Mortgage Pass-Through Certificates, Series 2021-FILE, Class ECCC (sf)--Confirmed
    US
    02-Jul-25Commercial Mortgage Pass-Through Certificates, Series 2021-FILE, Class HRRCCC (sf)--Confirmed
    US
    More
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DROP Mortgage Trust 2021-FILE
  • Date Issued:Jul 2, 2025
  • Rating Action:Confirmed
  • Ratings:AA (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:US
  • Date Issued:Jul 2, 2025
  • Rating Action:Confirmed
  • Ratings:AA (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:US
  • Date Issued:Jul 2, 2025
  • Rating Action:Confirmed
  • Ratings:AA (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:US
  • Date Issued:Jul 2, 2025
  • Rating Action:Confirmed
  • Ratings:AA (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:US
  • Date Issued:Jul 2, 2025
  • Rating Action:Confirmed
  • Ratings:BBB (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:US
  • Date Issued:Jul 2, 2025
  • Rating Action:Confirmed
  • Ratings:BB (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:US
  • Date Issued:Jul 2, 2025
  • Rating Action:Confirmed
  • Ratings:B (high) (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:US
  • Date Issued:Jul 2, 2025
  • Rating Action:Confirmed
  • Ratings:B (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:US
  • Date Issued:Jul 2, 2025
  • Rating Action:Confirmed
  • Ratings:CCC (sf)
  • Trend:--
  • Rating Recovery:
  • Issued:US
  • Date Issued:Jul 2, 2025
  • Rating Action:Confirmed
  • Ratings:CCC (sf)
  • Trend:--
  • Rating Recovery:
  • Issued:US
  • 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.