Morningstar DBRS Upgrades Credit Rating on One Class of MF1 2022-FL8 Ltd.

DBRS, Inc. (Morningstar DBRS) upgraded its credit rating on one class of notes issued by MF1 2022-FL8 Ltd. as follows:

-- Class B to AA (sf) from AA (low) (sf)

In addition, Morningstar DBRS confirmed the following credit ratings:

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

In addition, Morningstar DBRS changed the trend on Class G to Stable from Negative. The trend on Class H is Negative, and the trends on all remaining classes are Stable.

The credit rating upgrade for Class B primarily reflects the increased credit support to the transaction since the previous Morningstar DBRS credit rating action in May 2025. Additionally, the transaction benefits from the loan collateral being secured by multifamily (31 loans, representing 98.7% of the current trust balance) and manufactured housing properties (one loan, representing 1.3% of the current trust balance), which have historically proven to be better able to retain property value and cash flow compared with other property types. While individual borrowers have had mixed success in implementing the respective business plans to increase property cash flows and property values, the transaction continues to benefit from significant credit support to the investment-grade rated bonds as the below-investment-grade rated bonds, Classes F, E, and G, have a cumulative balance of $156.7 million, and the unrated first loss piece also has a current balance of $156.7 million. These factors supported the credit rating confirmations for the remainder of the capital stack, as well as the trend change to Stable for Class G and the Stable trends for all remaining classes other than Class H.

Morningstar DBRS maintained the Negative trend for Class H because of increased loan-level expected loss (EL) figures for the seven loans in special servicing (10.8% of the current trust balance) as well as for the increased EL figures for additional select underperforming loans in the transaction. Morningstar DBRS liquidated one loan, Mainstream Apartments (Prospectus ID#25; 2.0% of the current pool balance), in the analysis for this review. Morningstar DBRS applied increased loan-to-value ratio (LTV) and/or probability of default penalties for the remaining loans of concern to reflect the respective increased credit risks. The CMBS Insight Model output, when compared against the increased credit support for the transaction since issuance as a result of paydown, supported the credit rating actions with this review.

In conjunction with this press release, Morningstar DBRS published a Surveillance Performance Update report with an 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.

The initial collateral consisted of 32 floating-rate mortgage loans secured by 69 transitional multifamily properties and one manufactured housing community property, totaling $1.8 billion. Most loans were in a period of transition with plans to stabilize performance and improve the asset value. The transaction was structured with a Reinvestment Period that expired with the January 2024 Payment Date. As of the July 2025 remittance, the pool comprises 32 loans secured by 80 properties with a cumulative trust balance of $1.73 billion, reflecting a collateral reduction of 14.5% since issuance. Of the original 32 loans, 21 loans, representing 85.7% of the current trust balance, remain in the pool. Since the previous Morningstar DBRS credit rating action in May 2025, three loans, totaling $112.5 million, have been repaid in full.

Leverage across the pool has increased as of the July 2025 reporting when compared with issuance metrics, as the current weighted-average (WA) as-is appraised LTV is 82.2%, with a current WA stabilized LTV of 70.8%. In comparison, these figures were 72.1% and 64.5%, respectively, at issuance. Morningstar DBRS recognizes that select property values may be inflated as the majority of the individual property appraisals were completed in 2022 or earlier and may not fully reflect the effects of increased interest rates and/or widening capitalization rates in the current environment. In the analysis for this review, Morningstar DBRS applied upward LTV adjustments across 29 loans, representing 96.2% of the current trust balance, generally reflective of higher cap rate assumptions compared with the implied cap rates based on the issuance appraisals.

As of the July 2025 reporting, seven loans, representing 10.8% of the current trust balance, are in special servicing and eight loans, representing 16.4% of the current trust balance, are between 30 days and over 90 days delinquent. The loan of most concern, Mainstream Apartments (Prospectus ID#25; 2.0% of the current trust balance), is secured by a 324-unit Class B, garden-style multifamily property in Houston. The loan transferred to special servicing in May 2024 for payment default after the loan matured in January 2024. The loan has been delinquent since January 2024, and, according to the Q1 2025 collateral manager update, the property was 54.0% occupied as of February 2025. According to the collateral manager, foreclosure is in process and is expected to be completed in Q3 2025. Morningstar DBRS has not received an updated property value since loan closing when the as-is appraised value was $39.2 million. Morningstar DBRS liquidated the loan in its analysis, based on stressed value of $27.4 million. When including assumed expenses for advances and other liquidation expenses, the resulting loan loss severity was approximately 40.0%, or $14.5 million.

There are 25 loans on the servicer's watchlist, representing 76.4% of the current trust balance. The loans have primarily been flagged for below-breakeven debt service coverage ratios (DSCRs) and upcoming loan maturities. The largest loan on the servicer's watchlist, The Franklin Residences (Prospectus ID#2; 10.4% of the current trust balance), is secured by a 412-unit high-rise multifamily property in Philadelphia. The collateral also includes 135,000 square feet (sf) of commercial space. The loan is on the servicer's watchlist for a low DSCR, which was 0.98 times (x) for Q1 2025. The borrower's business plan at closing was to use $7.3 million of loan future funding to upgrade the remaining 163 classic units and increase the commercial space's occupancy rate. The property is approaching stabilization, as through February 2025, the borrower completed 133-unit upgrades, achieving an average rental rate of $2,637 per unit. Overall, the multifamily component was 96.8% occupied with an average rental rate of $2,810 per unit and the commercial component was 94.8% occupied. An additional $1.0 million of loan future funding remains available to the borrower as it works to complete the capital expenditures (capex) program. The property generated a YE2024 net cash flow of $10.7 million, equating to a debt yield of 5.9%. The loan matures in December 2025 and there is one additional one-year extension option remaining, potentially providing the borrower additional time to grow cash flow further if it is unable to execute its exit strategy prior to loan maturity.

As a result of lagging business plans and loan exit strategies, 22 loans, representing 57.9% of the current trust balance, have been modified. Terms for the modifications vary from loan to loan; however, common terms include interest deferrals via a hard and soft pay structure, waiving interest rate cap agreement requirements; and forbearance agreements, which have been executed to facilitate further modification discussions between both the lender and borrowers. The transaction also faces heightened maturity risk as 20 loans, representing 57.0% of the current trust balance, have already matured or will mature by YE2025. While all such loans have built-in extension options, Morningstar DBRS notes a number of loans will not qualify to exercise the related options based on current loan performance and therefore will likely need to be modified. Modifications, if executed, are expected to require additional equity commitments from borrowers.

Through June 2025, the lender had advanced cumulative loan future funding of $234.2 million to 26 outstanding individual borrowers. The largest advance, $39.5 million, was made to the borrower of the Park Portfolio loan, which is secured by a portfolio of eight garden-style multifamily properties totaling 317 units in Brooklyn, New York. The advanced funds have been used to fund the borrower's $17.0 million planned capex and fund various performance-based earnouts as part of the borrower's business plan to convert the majority of the units into affordable housing. The Q1 2025 collateral manager report noted the portfolio was 62.5% occupied, an increase from 41.6% as of May 2024. The occupancy rate for the rent-regulated units and market-rate units was 82.5% and 10.2%, respectively. According to the update, the lease-up of the six rent-regulated properties (totaling 229 units) has been slower than expected as the borrower continues the tenant application and screening process. The collateral manager also confirmed the renovation of the two market-rate properties, as well as the majority of the capex at the rent-regulated properties, have been completed. There remains $2.2 million of loan future funding available to the borrower to fund additional capex.

An additional $34.6 million of loan future funding allocated to 14 of the outstanding individual borrowers remains available. The largest portion of available funding ($5.7 million) is allocated to the borrower of The Dorsey loan, which is secured by a Class A, 2022-vintage multifamily property in Miami. The collateral also includes 73,000 sf of office space, 36,000 sf of ground-floor retail space, and a 476-space parking garage. Loan future funding is available to finance commercial leasing costs and operating shortfalls. According to the Q1 2025 collateral manager update, the multifamily component of the property was 90.8% occupied with an average rental rate of $3,142 per unit. The office component was 100.0% occupied by two tenants and the retail component was 48.0% leased, highlighted by a 12,000-sf lease to a furniture retailer.

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.

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 Class 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 rating stress(es) implied by the predictive model to be a significant factor in evaluating the credit ratings. The rationale for the material deviation is uncertain loan-level event risk as many borrowers are behind schedule in business plan execution.

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.

As applicable, 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, Inc.
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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

-- Interest Rate Stresses for U.S. Structured Finance Transactions (March 27, 2025)
https://dbrs.morningstar.com/research/450750

-- 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

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