Morningstar DBRS Confirms All Credit Ratings of BSPRT 2021-FL7 Issuer, Ltd.

DBRS, Inc. (Morningstar DBRS) confirmed its credit ratings on all classes of notes issued by BSPRT 2021-FL7 Issuer, Ltd. as follows:

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

All trends are Stable.

The credit rating confirmations reflect the overall stable performance of the underlying loans, which remain primarily secured by traditional multifamily collateral (20 loans, representing 74.4% of the current pool balance). Historically, loans secured by multifamily properties have exhibited lower default rates and the ability to retain and increase asset value. Additionally, most borrowers are progressing with the stated business plans to increase property cash flows and stabilize operations to increase the respective asset values. In conjunction with this press release, Morningstar DBRS 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.

As of the June 2025 remittance, the transaction had an outstanding balance of $553.7 million with 28 loans secured by 34 properties remaining in the trust. There has been a collateral reduction of 38.5% since the transaction became static in January 2024, following the post-closing, 24-month Reinvestment Period. Of the original 26 loans from the transaction closing in December 2021, 13 loans, representing 66.1% of the current pool balance, remain in the trust. Since August 2024, participations across four separate loans, representing 0.8% of the current pool balance, have been added to the trust via the transaction's exchange collateral interest feature while whole loans or participations of loans with a former cumulative trust balance of $241.9 million were successfully paid in full.

Beyond the multifamily concentration noted above, four loans, representing 13.7% of the current trust balance, are secured by hotel properties and one loan, representing 5.9% of the current trust balance, is secured by a student-housing property. In comparison with the pool as of August 2024, multifamily collateral represented 82.5% of the trust balance while hotel collateral represented 9.4% of the trust balance.

Leverage across the pool has remained similar since issuance as the current weighted-average (WA) as-is appraised value loan-to-value ratio (LTV) is 70.9% with the current WA stabilized LTV of 62.4%. In comparison, these figures were 70.8% and 64.4%, respectively, at issuance. Morningstar DBRS recognizes these appraised values may be inflated as the individual property appraisals were completed in 2021 or 2022 and do not reflect the current higher interest rate or widening capitalization rate environments. In the analysis for this review, Morningstar DBRS applied LTV adjustments to 22 loans, representing 86.7% of the current trust balance, generally reflective of higher cap rate assumptions compared with the implied cap rates based on the appraisals.

One loan, Cedar Grove Multifamily Portfolio (Prospectus ID#59; trust balance of $87,043) is delinquent and specially serviced. At closing, the $126.6 million initial loan was collateralized by 15 properties across North Carolina, South Carolina, and Oklahoma. The original borrower's business plan was to complete unit interior and propertywide upgrades across the portfolio, financed by loan future funding of $26.2 million. The loan transferred to the special servicer in January 2024 for payment default; however, $20.8 million of future funding had been advanced through October 2023. In September 2024, the sponsor executed a deed-in-lieu of foreclosure action with the lender. Since that time, the collateral manager has successfully sold 10 properties and of the five properties that were foreclosed on, only the Cobb House property remains as loan collateral. The asset is located in Rock Hill, South Carolina, and has an outstanding senior loan balance of $0.8 million. The property was reappraised in April 2025 at $2.5 million, representative of an LTV of 32.0%. Morningstar DBRS applied a haircut to the appraised value in its analysis given the property is currently not cash flowing; however, Morningstar DBRS ultimately expects the loan to be resolved with no loss. According to the collateral manager, the asset is expected to be sold in Q3 or Q4 2025.

Six loans, representing 24.2% of the current trust balance, are on the servicer's watchlist as of the June 2025 reporting. The loans have generally been flagged for low debt service coverage ratios (DSCRs). The largest loan on the servicer's watchlist, The Hudson at Cane Bay (Prospectus ID3; 10.9% of the current trust balance), is secured by a 2021 vintage multifamily property in Summerville, South Carolina. The borrower's business plan is to complete the initial lease-up phase and burn off concession loss, which has taken longer than initially anticipated. The loan has a current maturity date of November 2025 as the borrower exercised two of up to three 12-month extension options. In total, the borrower has paid down the loan by $2.3 million in conjunction with the maturity extensions and purchased multiple new interest rate cap agreements with a 2.0% strike price. According to Q1 2025 reporting provided by the collateral manager, the property was 88.3% occupied with an average rental rate of $1,650 per unit. While rental rates have remained consistent, property occupancy has declined from 94.2% as of March 2024. Net cash flow (NCF) of $3.3 million for the trailing 12 months (T-12) ended March 31, 2025, equated to a DSCR of 0.96x and is below the issuer's stabilized NCF of $3.6 million. Morningstar DBRS expects the borrower to exercise the final extension option if it is unable to increase NCF throughout 2025 in order to sell the property at a desired list price.

As of June 2025 reporting, the borrowers of 23 loans, representing 93.8% of the current trust balance, have received forbearances or loan modifications. These actions have provided relief to borrowers, most often in the form of maturity extensions with the waiver of performance tests and temporary reductions in debt service. In exchange, borrowers have been required to invest fresh equity into transactions to fund principal curtailments, fund carry reserves, and/or purchase a new interest rate cap agreement. Throughout 2025, 14 loans, representing 57.4% of the current trust balance, have scheduled maturity dates. All loans have at least one extension option available to the respective borrowers. In the instance individual property performance does not qualify to exercise an extension option, Morningstar DBRS expects the borrower and lender to negotiate mutually beneficial loan modifications to extend the loans.

Through June 2025, the lender had advanced $81.1 million in cumulative loan future funding to 20 of the outstanding individual borrowers to aid in property stabilization efforts, including $9.5 million since June 2024. Excluding the Cedar Grove Multifamily Portfolio loan, the largest advance to a single borrower ($9.9 million) since respective loan closing has been made to the Sage at 1825 & Cottages loan (Prospectus ID#62, trust balance of $199,942). The loan has a current senior note balance of $60.0 million and is secured by a multifamily property in Pflugerville, Texas. The original business plan contemplated renovating all 455 units; however, the loan was assumed in January 2025 and subsequently extended to February 2027. Prior to the assumption, 321 unit upgrades were completed and $7.9 million of loan future funding had been advanced. The updated business plan involves the completion of the remaining unit renovations budgeted at $1.1 million to be financed out of pocket by the sponsor and to enter into an affordable housing agreement to qualify for a full real estate tax exemption. As of the annualized T-11 period ended March 31, 2025, property NCF was $2.6 million, equating to a DSCR of 0.63x; however, the figure includes the full $1.7 million annual real estate tax payment. An update regarding the affordable housing agreement was not provided to Morningstar DBRS in conjunction with this review.

An additional $27.2 million of loan future funding allocated to nine individual borrowers remains available. The largest amount ($6.6 million) is available to the borrower of the Copperfield Apartments loan (Prospectus ID#69, trust balance of $356,023), which is secured by a multifamily property in Fort Worth, Texas. The loan has a current senior note balance of $22.8 million. The borrower's business plan is to use $9.5 million of future funding to finance the upgrade of the property with $6.0 million budgeted for the renovation of all 323 units. Since loan closing in March 2024, the borrower has upgraded 74 units with achieved monthly rental rate premiums of $95 per month, below the Morningstar DBRS projected premium of $193 per unit. The borrower has two additional years to complete the property upgrades with a completion date in the loan agreement of March 2027. Based on the current pace of renovations and future funding draws, the borrower appears to be behind in its business plan. As of the T-12 period ended March 31, 2025, the property generated NCF of $1.5 million, equating to a DSCR of 1.42x based on the funded loan balance of $21.5 million at that time.

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): 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 ratings assigned to the Class C, D, E, F, and G Notes materially deviate 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 to the Class C and D Notes is the structural features (loan or transaction) and/or provisions in other relevant methodologies outweigh the quantitative model output as the issuer is allowed to defer interest due to Class C through Class H bondholders. The rationale for the material deviation to the Class E, F, and G Notes is that sustainability of the loan performance trends is not demonstrated as select borrowers remain behind in their respective business plans to increase property cash flow and asset value.

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 17g-7 disclosure report and/or the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

DBRS, Inc.
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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 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

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