DBRS Morningstar Confirms Ratings on Arbor Realty Commercial Real Estate Notes 2021-FL1, Ltd.

DBRS Limited (DBRS Morningstar) confirmed the ratings on all classes of commercial mortgage-backed notes issued by Arbor Realty Commercial Real Estate Notes 2021-FL1, Ltd. as follows:

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

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction, which has remained in line with DBRS Morningstar’s expectations since issuance. 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 and with business plan updates on select loans. To access this report, please click on the link under Related Documents below or contact us at info@dbrsmorningstar.com.

The transaction closed in March 2021 with the initial collateral pool consisting of 37 floating-rate mortgages and senior participations secured by 64 mostly transitional properties, totalling $635.2 million, including approximately $12.4 million of non-interest-accruing future funding. Most of the loans contributed at issuance were secured by cash flowing assets, with some level of stabilization remaining. The transaction included a 180-day ramp-up acquisition period, which was completed in July 2021 when the cumulative loan balance totalled $785.0 million.

The transaction includes a 30-month reinvestment period, expiring with the September 2023 Payment Date. During this period, reinvested principal proceeds are subject to Eligibility Criteria, which include a rating agency no-downgrade confirmation by DBRS Morningstar for all new mortgage assets and funded companion participations exceeding $1.0 million, among others. Since issuance, 19 loans with a cumulative balance of $224.4 million have been added to the trust. As of the February 2022 reporting, the Principal Collection Account had a balance of $84.8 million available to the collateral manager to purchase additional loan interests into the transaction.

As of the February 2022 remittance report, the transaction consists of 44 loans with a cumulative loan balance of $700.2 million. In general, borrowers are progressing toward completing their stated business plans; through December 2021, the collateral manager had released $23.1 million in reserves to 31 individual borrowers to aid in property stabilization efforts. An additional $60.4 million of unadvanced future funding allocated to 41 individual borrowers remains outstanding.

The transaction is concentrated by property type as all loans are secured by multifamily properties and all future reinvestment loan contributions will be secured by multifamily properties as outlined in the eligibility criteria. The transaction is also concentrated by loan size, as the largest 10 loans represent 49.7% of the pool. No loans are on the servicer’s watchlist or in special servicing as of the February 2022 remittance. No loans have received a forbearance, and only one loan, Commuter Portfolio (Prospectus ID#3; 5.1% of the current pool balance) has been modified, which occurred in June 2021 as a one-time approved transfer of membership interests.

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.

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 issuer and servicer 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 the North American CMBS Surveillance Methodology (March 4, 2022), 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.

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577