Morningstar DBRS Assigns Provisional Credit Ratings to BHMS Commercial Mortgage Trust 2025-ATLS

DBRS, Inc. (Morningstar DBRS) assigned provisional credit ratings to the following classes of Commercial Mortgage Pass-Through Certificates, Series 2025-ATLS (the Certificates), to be issued by BHMS Commercial Mortgage Trust 2025-ATLS (the Issuer):

--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 transaction is secured by the borrowers' fee-simple interest in the Atlantis (the Atlantis or the Resort), a luxury beachfront resort comprising 3,317 keys, of which 2,430 keys (73.3% of total keys) are collateral for the transaction. The Resort is located on Paradise Island in Nassau, the Bahamas, approximately 185 miles southeast of Miami. The differentiated hotel accommodations present various offerings and experiences that attract a diverse guest base across transient, corporate, casino, and group travelers at various price points. Morningstar DBRS has a positive view of the collateral considering its ownership history, capital expenditure (capex) history, prime beachfront location, and strong post-pandemic recovery, as well as the significant historical and ongoing capital investments to be made at the property.

The Atlantis is renowned for its specialty resort amenities, including its 141-acre Aquaventure water park; recently renovated 60,000-square-foot (sf) casino; marine habitats and exhibits such as The Dig aquarium, the Paradise Estuary Lagoon, and Dolphin Cay; a 63-slip marina; a fitness center equipped with a four-lane pool, six tennis courts, and personal trainers; a movie theatre; 11 swimming pools; over 40 restaurants and bars; the 30,000-sf Mandara Spa; approximately 35,000 sf of leased retail to over 68 iconic international luxury brands; a chapel; and a host of nightlife options, such as the teen nightclub Crush and the Aura Nightclub for adults. The variety of amenities cater to guests young and old alike. Additionally, the different collateral hotel towers accommodate diverse economic demographics. The hotel keys that serve as collateral for the loan represent 73.3% of the total units and are in The Coral, The Royal, and The Cove. The 887 condominium hotel units that are not included in the collateral consist of timeshares and condominiums owned by guests at The Reef and Harborside, which contain 495 units and 392 units, respectively; however, these are part of a revenue sharing program with the Resort, which will be included as collateral.

Between 2012 and 2024, the sponsor spent approximately $519.3 million across the Resort to renovate hotel rooms, lobbies, food and beverage offerings, and the casino, among other improvements. Between 2025 and 2027, the borrower plans to renovated the guestrooms, pool deck, and public areas at the Cove hotel tower with an anticipated capex spend of $135.0 million ($225,000 per key).

The property has demonstrated strong performance since the COVID-19 pandemic. In 2019, prior to the pandemic, the collateral reported an occupancy rate of 71.2% and an average daily rate of $296, resulting in revenue per available room (RevPAR) of $211. The property exhibited performance disruptions stemming from the pandemic from 2020 to 2022 with achieved RevPAR of $44, $118, and $213, respectively. While the collateral realized a 79.1% reduction in RevPAR from 2019 to 2020, the property's performance continued to struggle in 2021 as a result of international travel restrictions, with a YE2021 RevPAR of $118, representing a 43.9% reduction in RevPAR compared with YE2019. Despite pandemic disruptions persisting into 2022, the property achieved a YE2022 RevPAR of $213, an 80.1% increase between 2021 and 2022 and a 1.0% increase from YE2019 figures. RevPAR subsequently increased rapidly in 2023 to $274, a 29.8% increase from the YE2019 RevPAR before decreasing 2.8% to $266 RevPAR in 2024. As of the trailing 12-month (T-12) period ended May 31, 2025, RevPAR declined an additional 2.2% to $260 from the 2024 achieved RevPAR. Morningstar DBRS believes this normalization of RevPAR is due to the phasing out of pent-up transient demand witnessed in 2022 and 2023 following the removal of pandemic-related travel restrictions. Morningstar DBRS expects moderate RevPAR growth in the future because of the subject property's desirable location, recently completed capital improvements, contemplated future capital improvements, and diversified amenities and offerings. Morningstar DBRS concluded to a sustainable RevPAR figure of $256, which is 1.4% below the RevPAR figure as of the T-12 period ended May 31, 2025.

The borrower sponsors for this transaction include one or more affiliates of Brookfield and/or Oaktree. Brookfield is a leading global asset manager with approximately $1 trillion in assets under management (AUM) as of the quarter ended March 31, 2025. Per the Issuer, Brookfield and its affiliates have approximately $272 billion in AUM spanning 400 million sf managed globally and over 37 million sf under development. Brookfield owns and manages full-service hotels, including the subject collateral, in addition to leisure-style hospitality assets totaling 171 properties consisting of approximately 35,000 keys in markets across the world. Oaktree is a leader among global investment managers specializing in alternative investments, possessing approximately $203 billion in AUM as of March 2025. Per the Issuer, Oaktree's real estate platform manages approximately $14 billion in AUM.

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 rated 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 Premium.

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
ESG considerations had a relevant and/or significant effect on the credit analysis.

Environmental (E) Factors
Climate and Weather Risks had a relevant effect on the credit analysis. Located in the Caribbean, the islands of the Bahamas are subject to frequent hurricanes, although the country is working toward improving its resilience to climate change and storm surges. The loan structure requires wind/named storm insurance coverage and business interruption insurance. However, Morningstar DBRS found the amount of wind/named storm coverage to be deficient from standard commercial mortgage-backed securities transactions and made adjustments to its analysis to account for these factors.

Governance (G) Factors
Passed-through Governance credit considerations had a significant effect on the credit analysis because of Morningstar DBRS' private credit rating analysis of the Commonwealth of the Bahamas, which analyzed the country's economy, environmental concerns such as natural disasters/hurricanes, and public debt.

There were no Social 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.

For a more detailed discussion of the sovereign risk impact on Structured Finance credit ratings, please refer to Appendix C: The Impact of Sovereign Credit Ratings on Other Morningstar DBRS Credit Ratings of the Global Methodology for Rating Sovereign Governments, (July 09, 2025) https://dbrs.morningstar.com/research/457952.

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.