Morningstar DBRS Assigns Provisional Credit Ratings to COMM 2025-SBX Mortgage Trust
CMBSDBRS, Inc. (Morningstar DBRS) assigned provisional credit ratings to the following classes of Commercial Mortgage Pass-Through Certificates, Series 2025-SBX (the Certificates) to be issued by COMM 2025-SBX Mortgage 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 (high) (sf)
-- Class HRR at (P) BBB (sf)
All trends are Stable.
The COMM 2025-SBX single-asset/single-borrower transaction is collateralized by the borrower's fee-simple interest in Starbucks Center, a nine-story 1.4 million-sf mixed-use property with 1.3 million sf of office space, a parking garage, and an adjacent retail parcel 100% occupied by The Home Depot. The property is in Seattle, WA, in the South Seattle submarket, and is 96.9% leased; Starbucks leases 1.3 square feet and accounts for 88.4% of the total NRA, and The Home Depot leases 108,200 square feet of space and accounts for 7.2% of the total NRA. The campus contains a mix of office, retail, and warehouse space and is able to accommodate 3,500 Starbucks employees, serving as its global headquarters. The property was originally constructed in multiple phases between 1912 and 1925 with a total of five more additions to the property from 1946 to 2001. The collateral was originally constructed as the Sears, Roebuck & Co.'s flagship Seattle retail center and was acquired by the sponsor in 1991; the sponsor has since transformed the Starbuck Center into what it is currently as a mixed-use property that spans 9.7-acres and 1.4 million square feet. Starbucks has invested $266 million into the property since 2015 to specifically build out the space to accommodate its unique needs as a business.
Starbucks, an investment-grade rated company, is the single office tenant at the property and comprises 88.4% of the total NRA at the property. Starbucks extended its lease in 2018, and it currently extends until 2038, a total WALT of 13 years with no contractual or termination options. Since taking occupancy at the property in 1993, the company has expanded its space from 60,000 square feet to the 1.3 million square feet it currently occupies. Throughout its time at the property, it has invested about $365 million, with $266 million invested since 2015 to specifically build out its space to accommodate its unique business needs. The office space at this property currently offers various amenities in addition to the unique office space; such amenities consist of a full-service fitness center, day-care facilities, multiple dining and cafeteria options, and space where the company can test its new food and beverage concepts. The Home Depot has been at the property since 1993 and accounts for 7.2% of the total NRA with a lease extending until January 2029 and one five-year extension option remaining. This is the only The Home Depot location in the downtown Seattle area and has strong sales and occupancy cost at $690 psf and 2.9%, respectively, as of YE2024.
The loan is structured with an anticipated repayment date (ARD) three years from origination with final maturity in August 2033. Morningstar DBRS estimates that excess cash flow should pay down the loan balance by 17.0% from $435.0 million to $361.1 million, by final loan maturity. The rating of Class D depends in large part upon the explicit credit being given to the amortization achievable after the ARD from the cash flow provided by Starbucks. The credit rating of Class D does not mirror the credit rating of Starbucks and is two notches below Starbuck's current credit rating. In the event, there are significant changes to the Starbucks' credit rating to below the current rating of Class D, the credit rating of Class D may be subject to downgrade.
The sponsor for this transaction is Nitze-Stagen & Co., Inc. and Daniels Real Estate. Daniels Real Estate is an affiliate of Nitze-Stagen. Nitze-Stagen has a portfolio of properties throughout the greater Seattle market and is involved in commercial development and redevelopment of historic and landmark buildings throughout the area.
Morningstar DBRS' credit ratings on the Certificates address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations are the related Principal Distribution Amounts and Interest Distribution Amounts for the related classes.
Morningstar DBRS' credit ratings do not address nonpayment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations. For example, Yield Maintenance Premiums.
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 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.
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.
With regard to due diligence services, Morningstar DBRS was provided with the Form ABS Due Diligence-15E (Form-15E), which contains a description of the information that a third party reviewed in conducting the due diligence services and a summary of the findings and conclusions. While due diligence services outlined in Form-15E do not constitute part of Morningstar DBRS' methodology, Morningstar DBRS used the data file outlined in the independent accountant's report in its analysis to determine the credit ratings referenced herein.
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 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 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
-- 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.