Press Release

Morningstar DBRS Upgrades Credit Ratings on Six Classes of Real Estate Asset Liquidity Trust, Series 2021-1, Changes Trends on Seven Classes to Positive From Stable

CMBS
July 03, 2025

DBRS Limited (Morningstar DBRS) upgraded its credit ratings on six classes of Commercial Mortgage Pass-Through Certificates, Series 2021-1 issued by Real Estate Asset Liquidity Trust, Series 2021-1 as follows:

-- Class C to AA (high) (sf) from AA (sf)
-- Class D-1 to A (high) (sf) from BBB (high) (sf)
-- Class D-2 to A (high) (sf) from BBB (high) (sf)
-- Class E to A (sf) from BBB (sf)
-- Class F to BB (high) (sf) from BB (sf)
-- Class G to B (high) (sf) from B (sf)

Morningstar DBRS confirmed the credit ratings on the remaining classes as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class X at AAA (sf)
-- Class B at AA (high) (sf)

In addition, Morningstar DBRS changed the trends on Classes B, C, D-1, D-2, E, F, and G to Positive from Stable. The trends on the remaining classes are Stable.

The credit rating upgrades and Positive trends reflect the continued principal paydown since issuance, as a result of loan repayments and amortization; favourable property type concentrations; and the overall stable-to-improving performance of the remaining loans in the pool, which reported a weighted-average (WA) debt service coverage ratio (DSCR) of 1.71 times (x); based on the most recent year-end financial reporting. Since Morningstar DBRS' previous credit rating action, one loan, Conklin Place Plaza (Prospectus ID#12, previously 2.2% of the pool balance), which was previously identified as being at increased risk of default given a below breakeven DSCR, repaid in full. In total, loan repayments and amortization have reduced the pool balance to $456.3 million as of the June 2025 reporting, representing a collateral reduction of 16.1% since issuance. In addition, 17 loans, representing 19.8% of the current pool balance, have maturity dates in 2025 and 2026. Morningstar DBRS expects these loans will repay from the trust based on their WA debt yield and DSCR of 10.96% and 1.59x, respectively. This additional paydown will lead to further improvement in credit enhancement levels, further supporting the Positive trends assigned with this review.

As of the June 2025 remittance, 74 of the original 79 loans remain in the pool. There are no specially serviced or delinquent loans. One loan (representing 0.9% of the pool balance) has been defeased, and four loans (7.4%) are on the servicer's watchlist, one of which (2.0%) is being monitored for an upcoming maturity. The transaction is generally well distributed by property type with multifamily, retail, and industrial assets accounting for 34.8%, 19.7%, and 18.5% of the pool balance, respectively. Only four loans, representing 8.9% of the pool balance, are backed by office properties, further highlighting the favourable makeup of the pool's underlying collateral. The majority of loans remaining in the pool benefit from some level of meaningful recourse to the loan's sponsor.

The largest remaining loan in the pool, McKeown Commons North Bay (Prospectus ID#2, 5.1% of the current pool balance), is secured by a retail power center in North Bay, Ontario. The property is primarily leased to national and investment-grade rated tenants. Morningstar DBRS previously noted that tenants representing approximately 50.0% of the net rentable area (NRA) had leases set to expire prior to December 2025. However, according to the servicer, the vast majority of those tenants have elected to exercise their respective extension options. According to the June 2024 rent roll, the property remains 100.0% occupied. Given the developments outlined above, Morningstar DBRS removed the probability of default (POD) adjustment in its analysis for this review, resulting in a loan-level expected loss (EL) that is relatively in line with the WA pool EL.

The largest loan on the servicer's watchlist, Tamarack Gardens Multifamily Edmonton (Prospectus ID#8, 3.1% of the current pool balance), is secured by a 126-unit multifamily complex in Edmonton, Alberta. The loan was added to the servicer's watchlist in January 2023 for a low DSCR. Cash flow has trended downward as a result of an increase in total operating expenses, which, as of the September 2024 reporting, was 78.2% higher than the underwritten figure at issuance. The increase is primarily attributable to repairs and maintenance costs due to the hiring of additional maintenance and cleaning staff and extensive repairs across several units. According to the February 2025 rent roll, the property was 89.7% occupied, a decrease from the January 2024 and issuance figures of 96.2% and 95.2%, respectively. Rising expenses have been partially offset by an increase in average rental rates at the property, which as of February 2025 was $1,698 per unit compared with the January 2024 and issuance underwritten figures of $1,438 and $1,260, respectively. As a result, the trailing 12-month (T-12) ended September 30, 2024, DSCR improved to 1.14x from the T-12 ended September 30, 2023, figure of 0.87x, in line with the Morningstar DBRS DSCR at issuance. Given the loan's status on the servicer's watchlist and decline in the property's occupancy rate, Morningstar DBRS maintained a conservative POD adjustment in the analysis for this review, resulting in an EL that was almost five times the pool average.

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

Class X 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 assigned to Classes F and G materially deviate from the credit ratings 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 ratings would consider a three-notch or more deviation from the credit ratings stress implied by the predictive model to be a significant factor in evaluating the credit ratings. The rationale for the material deviations is uncertain loan-level event risk given the near-term maturity dates for a considerable number of loans in the pool. In addition, Morningstar DBRS noted that the junior classes do not provide a significant amount of cushion to insulate against potential losses, should loans on the watchlist, or any other loans experience performance declines, further warranting the material deviations on Classes F and G.

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 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 and Derivatives Criteria for Canadian Structured Finance (August 12, 2024)
https://dbrs.morningstar.com/research/437761

-- 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/410863 (July 17, 2023).

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
    03-Jul-25Commercial Mortgage Pass-Through Certificates, Series 2021-1, Class BAA (high) (sf)PosTrend Change, Confirmed
    CA
    03-Jul-25Commercial Mortgage Pass-Through Certificates, Series 2021-1, Class CAA (high) (sf)PosUpgraded, Trend Change
    CA
    03-Jul-25Commercial Mortgage Pass-Through Certificates, Series 2021-1, Class D-1A (high) (sf)PosUpgraded, Trend Change
    CA
    03-Jul-25Commercial Mortgage Pass-Through Certificates, Series 2021-1, Class D-2A (high) (sf)PosUpgraded, Trend Change
    CA
    03-Jul-25Commercial Mortgage Pass-Through Certificates, Series 2021-1, Class EA (sf)PosUpgraded, Trend Change
    CA
    03-Jul-25Commercial Mortgage Pass-Through Certificates, Series 2021-1, Class FBB (high) (sf)PosUpgraded, Trend Change
    CA
    03-Jul-25Commercial Mortgage Pass-Through Certificates, Series 2021-1, Class GB (high) (sf)PosUpgraded, Trend Change
    CA
    03-Jul-25Commercial Mortgage Pass-Through Certificates, Series 2021-1, Class A-1AAA (sf)StbConfirmed
    CA
    03-Jul-25Commercial Mortgage Pass-Through Certificates, Series 2021-1, Class A-2AAA (sf)StbConfirmed
    CA
    03-Jul-25Commercial Mortgage Pass-Through Certificates, Series 2021-1, Class XAAA (sf)StbConfirmed
    CA
    More
    Less
Real Estate Asset Liquidity Trust, Series 2021-1
  • Date Issued:Jul 3, 2025
  • Rating Action:Trend Change, Confirmed
  • Ratings:AA (high) (sf)
  • Trend:Pos
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jul 3, 2025
  • Rating Action:Upgraded, Trend Change
  • Ratings:AA (high) (sf)
  • Trend:Pos
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jul 3, 2025
  • Rating Action:Upgraded, Trend Change
  • Ratings:A (high) (sf)
  • Trend:Pos
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jul 3, 2025
  • Rating Action:Upgraded, Trend Change
  • Ratings:A (high) (sf)
  • Trend:Pos
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jul 3, 2025
  • Rating Action:Upgraded, Trend Change
  • Ratings:A (sf)
  • Trend:Pos
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jul 3, 2025
  • Rating Action:Upgraded, Trend Change
  • Ratings:BB (high) (sf)
  • Trend:Pos
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jul 3, 2025
  • Rating Action:Upgraded, Trend Change
  • Ratings:B (high) (sf)
  • Trend:Pos
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jul 3, 2025
  • Rating Action:Confirmed
  • Ratings:AAA (sf)
  • Trend:Stb
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jul 3, 2025
  • Rating Action:Confirmed
  • Ratings:AAA (sf)
  • Trend:Stb
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jul 3, 2025
  • Rating Action:Confirmed
  • Ratings:AAA (sf)
  • Trend:Stb
  • 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.