DBRS Morningstar Upgrades Ratings on Six Classes, Confirms Ratings on Two Classes of MF1 2019-FL2, Ltd.

DBRS Limited (DBRS Morningstar) upgraded its ratings on the following classes of the Commercial Mortgage-Backed Notes issued by MF1 2019-FL2, Ltd. (the Issuer):

-- Class B to AAA (sf) from AA (low) (sf)
-- Class C to AA (sf) from A (low) (sf)
-- Class D to AA (low) (sf) from BBB (high) (sf)
-- Class E to A (sf) from BBB (low) (sf)
-- Class F to BBB (low) (sf) from BB (low) (sf)
-- Class G to B (high) (sf) from B (low) (sf)

In addition, DBRS Morningstar confirmed the ratings on the following two classes:

-- Class A at AAA (sf)
-- Class A-S at AAA (sf)

DBRS Morningstar has also changed the trends on Classes C, D, E, F, and G to Positive from Stable. The trends on Classes A, A-S, and B are Stable. These rating actions and Positive trends reflect the overall strong performance of the transaction and significant de-leveraging, with collateral reduction of 48.4% since issuance, based on the August 2021 reporting.

In conjunction with this press release, DBRS Morningstar has published a Surveillance Performance Update report with in-depth analysis and credit metrics for the transaction with business plan updates on the select loans. To access this report, please click on the link under Related Documents below or contact us at info@dbrsmorningstar.com.

At issuance, the pool comprised 38 floating-rate mortgage loans secured by 39 transitional multifamily properties totalling $654.6 million, excluding $68.4 million of remaining future funding commitments and $248.2 million of pari passu debt. Of these loans, 32 loans were structured with future funding participations, which the Issuer could acquire in the future. Per the August 2021 reporting, 12 loans remain in the pool, with an aggregate principal balance of $345.6 million, excluding future funding commitments and $62.9 million of pari passu debt. Of these loans, $29.3 million has been released to ten individual borrowers to aid in property stabilization efforts. An additional $5.1 million in loan future funding commitments allocated to five individual borrowers remains outstanding.

According to the August 2021 reporting, there are no loans in special servicing and five loans (34.2% of the current pool) are on the servicer’s watchlist, all of which have been flagged for loan maturity, among other triggers. The collateral manager has indicated that extension options for two loans, Wave Lakeview (11.4% of the current pool) and Lenox Portfolio (11.1% of the pool), have been executed. The remaining three loans are both structured with extension options available to the respective borrowers.

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.

DBRS Morningstar materially deviated from its North American CMBS Insight Model when determining the ratings assigned to Classes D, E, F, and G, as the quantitative results suggested a higher rating. The material deviation is warranted, given the uncertain loan level event risk and adverse selection.

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

DBRS Morningstar provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for this transaction.

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

The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482/baseline-macroeconomic-scenarios-application-to-credit-ratings.

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.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar’s outlooks and ratings are monitored.

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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