DBRS Morningstar Confirms Ratings on Oceanview Mortgage Loan Trust 2020-SBC1

DBRS Limited (DBRS Morningstar) confirmed the ratings on the secured floating-rate notes, Series 2020-SBC1 issued by Oceanview Mortgage Loan Trust 2020-SBC1 as follows:

-- Class A1-A at AAA (sf)
-- Class A1-B at AAA (sf)
-- Class A1-C at AAA (sf)
-- Class A1-XA at AAA (sf)
-- Class A1-XB at AAA (sf)
-- Class A1-XC at AAA (sf)
-- Class A1-XD at AAA (sf)
-- Class A1-XE at AAA (sf)
-- Class M1-A at AA (sf)
-- Class M1-B at AA (sf)
-- Class M1-C at AA (sf)
-- Class M1-XA at AA (sf)
-- Class M1-XB at AA (sf)
-- Class M1-XC at AA (sf)
-- Class M1-XD at AA (sf)
-- Class M1-XE at AA (sf)
-- Class M2-A at A (sf)
-- Class M2-B at A (sf)
-- Class M2-C at A (sf)
-- Class M2-XA at A (sf)
-- Class M2-XB at A (sf)
-- Class M2-XC at A (sf)
-- Class M2-XD at A (sf)
-- Class M2-XE at A (sf)
-- Class M3-A at BBB (sf)
-- Class M3-B at BBB (sf)
-- Class M3-C at BBB (sf)
-- Class M3-XA at BBB (sf)
-- Class M3-XB at BBB (sf)
-- Class M3-XC at BBB (sf)
-- Class M3-XD at BBB (sf)
-- Class M3-XE at BBB (sf)
-- Class M4-A at BBB (low) (sf)
-- Class M4-B at BBB (low) (sf)
-- Class M4-C at BBB (low) (sf)
-- Class M4-XA at BBB (low) (sf)
-- Class M4-XB at BBB (low) (sf)
-- Class M4-XC at BBB (low) (sf)
-- Class M4-XD at BBB (low) (sf)
-- Class M4-XE at BBB (low) (sf)
-- Class B1-A at BB (high) (sf)
-- Class B1-B at BB (high) (sf)
-- Class B1-XA at BB (high) (sf)
-- Class B1-XB at BB (high) (sf)
-- Class B1-XC at BB (high) (sf)
-- Class B2 at BB (low) (sf)
-- Class B3 at B (low) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction. The collateral consists of 637 individual loans secured by 761 commercial, multifamily, and single-family rental (SFR) properties with an average loan balance of $428,354. According to the June 2021 remittance report, 39 loans have repaid, representing a collateral reduction of approximately 5.6%. Per the most recent reporting, 15 loans, representing 2.5% of the pool, are delinquent. The transaction is configured with a sequential-pay pass-through structure.

The pool is diverse, based on loan size, as the 10 largest loans represent only 7.1% of the overall pool balance. Increased pool diversity helps to insulate the higher-rated classes from loan-level event risk. Of the 637 loans, 399 loans, representing 60.1% of the pool, have a fixed interest rate with an average rate of 6.9%. The floating-rate loans have interest rate life floors ranging from 2.00% to 10.3%, with a straight average of 7.00%. All but two of the loans fully amortize over their respective remaining loan terms, resulting in 99.9% expected amortization, virtually eliminating refinance risk.

The loans are mostly secured by traditional property types (retail, multifamily, office, and industrial) with no exposure to hospitality properties and minimal exposure to manufactured housing, which represents 0.2% of the pool balance. The pool is heavily concentrated with multifamily properties, representing 39.1% of the pool. Additionally, the pool is mostly concentrated in California, Florida, and New Jersey, representing 16.0%, 7.2%, and 6.3% of the pool, respectively.

DBRS Morningstar notes that 46 loans, representing 3.1% of the trust balance, are secured by SFR properties. The CMBS Methodology does not currently contemplate ratings on SFR properties. To address this, at issuance and for this review, DBRS Morningstar considerably increased the expected loss on these loans by approximately 2.9x over the average non-SFR expected loss.

Based on the original loan balance and the appraisal at origination, the pool had a weighted average (WA) loan-to-value ratio (LTV) of 66.9%. DBRS Morningstar applied a pool average LTV of 71.3%, which reflects adjustments made to values based on implied cap rates by market rank.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

Classes A1-XA, A1-XB, A1-XC, A1-XD, A1-XE, M1-XA, M1-XB, M1-XC, M1-XD, M1-XE, M2-XA, M2-XB, M2-XC, M2-XD, M2-XE, M3-XA, M3-XB, M3-XC, M3-XD, M3-XE, M4-XA, M4-XB, M4-XC, M4-XD, M4-XE, B1-XA, B1-XB, and B1-XC are interest-only (IO) certificates that reference a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated applicable reference obligation tranche as IO classes have the same payment priority as the obligation tranche.

All ratings are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by DBRS Morningstar.

The DBRS Viewpoint platform provides additional information on this transaction and underlying loans including DBRS Morningstar metrics, commentary, servicer-reported cash flows, and other performance-related data.

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com. The platform includes loan-level data for most outstanding CMBS transactions (including non-DBRS Morningstar-rated), as well as loan-level and transaction-level commentary for most DBRS Morningstar-rated and -monitored transactions.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is North American CMBS Surveillance Methodology (March 26, 2021), which can be found on dbrsmorningstar.com under Methodologies & Criteria. For a list of the structured-finance-related methodologies that may be used during the rating process, please see the DBRS Morningstar Global Structured Finance Related Methodologies document, which can be found on dbrsmorningstar.com in the Commentary tab under Regulatory Affairs. Please note that not every related methodology listed under a principal structured finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info@dbrsmorningstar.com.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The DBRS Morningstar long-term rating scale definition indicates that ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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