DBRS Morningstar Confirms Ratings on All Classes of BX Commercial Mortgage Trust 2021-IRON

DBRS Limited (DBRS Morningstar) confirmed its ratings on all classes of the Commercial Mortgage Pass-Through Certificates, Series 2021-IRON issued by BX Commercial Mortgage Trust 2021-IRON as follows:

-- Class A at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (low) (sf)
-- Class F at B (low) (sf)
-- Class HRR at B (low) (sf)
-- Class X-CP at BBB (sf)
-- Class X-NCP at BBB (sf)

All trends are Stable.

The rating confirmations and Stable trends reflect DBRS Morningstar’s unchanged credit opinion for the transaction since the 2021 issuance date.

The transaction closed in February 2021 when ratings were assigned. The $232.0 million loan is secured by a portfolio of 14 industrial properties with a combined 2.3 million square feet throughout California, New Jersey, Pennsylvania, Maryland, and Virginia, with the largest concentration in California. The two-year loan pays full-term interest-only through its maturity in February 2023 and is structured with five one-year extension options. The loan sponsors, BREIT, are affiliated entities of the Blackstone group. The entire portfolio consists of function bulk warehouse products and was part of a sale-leaseback to Iron Mountain Inc. and serves as secure document storage and tape storage facilities for Iron Mountain’s record retention and storage clients. As part of the transaction, Iron Mountain signed two brand-new 10-year triple-net leases covering all the properties in the portfolio and are structured with four five-year renewal options with annual 3.0% rent escalations. As of the provided September 2021 rent roll, the portfolio remains 100.0% occupied.

The sponsor has the right to incur future mezzanine debt on the portfolio subject to a maximum appraisal loan-to-value ratio (LTV) of 57.0% and an aggregate debt yield of 7.98% or greater. As of this review, the servicer has confirmed that no additional mezzanine debt has been incurred. The loan is also subject to prepayment premium for the release of individual assets at 105.0% for the first 30.0% of the original principal balance and 110.0% thereafter. Lastly, the loan is structured with a partial pro rata/sequential-pay structure, as the loan allows for pro rata paydowns for the first 30.0% of unpaid principal balance, the trust currently pays pro rata. A cap rate of 7.0% and total qualitative adjustments of 7.50% were maintained from issuance bringing the DBRS Morningstar value to a conservative $233.5 million and a DBRS Morningstar LTV of 99.3%.

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 X-CP and X-NCP 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 adjusted upward by one notch if senior in the waterfall.

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.

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.

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.

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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