Morningstar DBRS Confirms All Credit Ratings of Benchmark 2021-B23 Mortgage Trust

DBRS, Inc. (Morningstar DBRS) confirmed all credit ratings on the classes of Commercial Mortgage Pass-Through Certificates, Series 2021-B23 issued by Benchmark 2021-B23 Mortgage Trust as follows:

-- Class A-2 at AAA (sf)
-- Class A-4A1 at AAA (sf)
-- Class A-4A2 at AAA (sf)
-- Class A-5 at AAA (sf)
-- Class A-AB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class 360A at A (low) (sf)
-- Class 360B at BBB (low) (sf)
-- Class 360C at BB (low) (sf)
-- Class 360D at B (low) (sf)

All trends are Stable.

The credit rating confirmations reflect the continued healthy performance of the transaction since issuance as evidenced by the weighted-average (WA) debt service coverage ratio (DSCR) of 3.68 times (x) as of the most recent reporting. The transaction also benefits from three loans in the top 10, representing 14.9% of the pool balance, being shadow-rated as investment grade by Morningstar DBRS.

At closing, the transaction consisted of 53 fixed-rate loans secured by 65 properties, with the pooled certificates totaling $1.53 billion. Per the June 2025 reporting, all 53 loans remain in the pool; however, one loan, totaling 1.2% of the pool, has been defeased since Morningstar DBRS' last review. There has been minimal amortization, with only 1.5% collateral reduction since issuance. Amortization will be limited through the life of the deal as 34 loans, representing 77.3% of the pool, are interest-only (IO) for the full term. As noted at issuance, the pool is expected to pay down by only 3.6% prior to maturity.

The pool is concentrated with loans backed by office properties, which represent 42.7% of the pool, followed by mixed-use and industrial properties, which represent 23.7% and 12.0% of the pool, respectively. Although the office sector continues to face significant challenges in the current economic environment, the majority of the office properties secured in this transaction continue to perform as expected, reporting a WA DSCR of 2.62x as of the most recent year-end financials in line with the previous year's WA DSCR figure.

As of the June 2025 reporting, there is one loan, Selig Office Portfolio (Prospectus ID#18, 2.4% of the pool) currently in special servicing. Additionally, there are 10 loans on the servicer's watchlist, representing 18.2% of the pool, including one loan in the top 10 being monitored for credit-related reasons in Millennium Corporate Park (Prospectus ID#2, 7.0% of the pool).

The Millennium Corporate Park loan is a five-year IO loan and secured by a 537,000-square-foot (sf) office complex consisting of six, two-, and three-story buildings about 15 miles east of Seattle in Redmond, Washington. The loan was added to the watchlist in June 2024 following a site inspection that indicated much of the space has gone dark, with a large portion of employees working from home. The property's largest tenant, Microsoft Corporation (Microsoft), accounting for 89.2% of the net rentable area, has a lease expiration in April 2028. While property occupancy was reported at 89% as of YE2024, servicer commentary and media reports indicate that Microsoft, which has no available termination options, is actively attempting to sublease all or nearly of its space.

The $132.0 million fixed-rate whole loan along with $95.2 million of borrower equity was used to purchase the property. The property resides in the Kirkland/Redmond/Bothell submarket of Seattle, which reported a vacancy rate of 10.3% as of Q1 2025, with an average asking rental rate of $34.90 per square foot (psf), according to Reis, Inc. (Reis). For the August 2024 credit rating action, Morningstar DBRS conducted a dark-value exercise to reflect the increased credit risk surrounding future tenancy and the potential refinance risk, which resulted in a loan-to-value ratio (LTV) of 165.0%. Given the lack of subleasing traction since 2023 when the marketing efforts for subleasing the Microsoft space began, for this review, Morningstar DBRS maintained the stressed LTV resulting in an expected loss (EL) for the loan that is more than double the pool average.

The sole loan in special servicing is the Selig Office Portfolio, which is secured by a portfolio of nine office buildings totaling 1.6 million sf throughout Seattle. The subject loan of $34.1 million represents a pari passu portion of a $379.1 million whole loan, with the additional senior notes secured in the Morningstar DBRS-rated GSMS 2015-GC30 and CGCMT 2015-GC31 transactions and the non-Morningstar DBRS-rated CGCMT 2015-GC29 and GSMS 2015-GC32 transactions. According to the servicer, the lender granted a 90-day forbearance while the parties continue to negotiate a loan modification. The occupancy rate has been on a steady decline since YE2019 and was most recently reported at 65.0% as of Q1 2025, compared with the issuance occupancy rate of 92.3%. For the same time periods, the loan reported a DSCR of 1.15x and 2.44x, respectively. Office properties within the Central Seattle submarket reported an average vacancy rate of 21.0% in Q1 2025, according to a Reis report. Given the low in-place occupancy rate, the loan was analyzed with a liquidation scenario based on a stressed value analysis. As the servicer has not provided updated appraisals to date, Morningstar DBRS referenced updated appraisals for similar Seattle office properties (also owned by the subject loan sponsor) in other Morningstar DBRS-rated CMBS transactions. Based on those comparable values, a haircut of 67% was applied to the October 2020 appraisal for the subject portfolio of $741.0 million, with the analyzed liquidation scenario resulting in a loss severity of nearly 40%, or approximately $13.8 million.

Three additional loans, 360 Spear (Prospectus ID#3, 5.9% of pool), MGM Grand & Mandalay Bay (Prospectus ID#5, 5.0% of pool), and the Grace Building (Prospectus ID#9, 4.0% of pool), were assigned investment-grade shadow ratings at issuance. With this review, Morningstar DBRS confirms that the characteristics of these loans remain consistent with investment-grade loan characteristics.

Class 360A, Class 360B, Class 360C, and Class 360D are loan-specific certificates (rake bonds) collateralized by the subordinate companion note for the 360 Spear whole loan. The loan-specific certificates will be entitled to receive distributions only from, and will incur losses only with respect to, the trust subordinate companion loan. The trust subordinate companion loan is included as an asset of the issuing entity but is not part of the mortgage pool backing the pooled certificates. No class of pooled certificates will have any interest in the trust subordinate companion loan.

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.

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

Class X-A is an 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 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

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

--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.