DBRS Morningstar Confirms Ratings on All Classes of CRSNT Trust 2021-MOON

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

-- Class A at AAA (sf)
-- Class A-Y at AAA (sf)
-- Class A-Z at AAA (sf)
-- Class A-IO at AAA (sf)
-- Class X-CP at AAA (sf)
-- Class X-NCP at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (low) (sf)
-- Class F at B (low) (sf)

All trends are Stable.

The rating confirmations reflect the consistent credit view for this transaction since its issuance in 2021. The $465.0 million trust loan, which is accompanied by a $60.0 million mezzanine loan (held outside of the trust), is secured by the borrower’s fee-simple interest in a 1.3 million-square-foot (sf) Class A+ office/retail building known as the Crescent located in Uptown/Turtle Creek submarket of Dallas. Building amenities include on-site restaurants, a deli, a fitness center, a conference center, garage parking, concierge services, on-site security, and an outdoor terrace. The property is part of a larger mixed-use development project that includes The Crescent Hotel, a 226-key luxury hotel, which is not a part of the collateral. Since 2015, the property has received $48.0 million in capital improvements including restroom renovations, a corridor refurbishment, a management office remodel, fitness center upgrades, and lobby updates to modernize the collateral.

The loan is interest-only (IO) through its initial three-year term with two one-year extension options. Total loan proceeds of $525.0 million, in addition to $172.3 million of fresh equity, were used to finance the $655.0 million acquisition of the collateral, fund $25.0 million of upfront TI/LC reserves, and cover closing costs. The loan is sponsored by Crescent Real Estate LLC, a real estate operating company and investment advisor with more than $8.5 billion in assets under management, development, and investment capacity at issuance. Based on the DBRS Morningstar value of $438.0 million, the DBRS Morningstar loan-to-value ratio (LTV) is 106.1% and 119.8%, based on the trust debt and total debt, respectively, inclusive of the $60.0 million mezzanine loan, compared with the appraised value of $675.0 million and a LTV of 68.9% and 77.8%.

As of the provided December 2021 rent roll, the subject is 90.2% occupied at an average rental rate of $31.02 per sf (psf). The largest collateral tenants include Weil, Gotshal & Manges LLC (5.7% of the net rentable area (NRA), lease expiry in July 2028), McKool Smith, PC (5.0% of the NRA, lease expiry in June 2030), Stanley Korshak LP (4.2% of the NRA, lease expiry in November 2022), Holland & Knight (3.4% of the NRA, lease expiry in June 2022) and NexPoint Advisors (3.3% of the NRA, lease expiry in December 2027). There is a cumulative rollover risk of 18.5% of the NRA within the next 12 months, inclusive of the second- and third-largest tenants, Stanley Korshak and Holland & Knight, respectively.

As of the most recent financials, the subject reported a trailing six-month September 2021 debt service coverage ratio (DSCR) of 3.35 times (x) compared with the DBRS Morningstar DSCR of 2.98x. Per a Q4 2021 Reis report, the Uptown submarket of Dallas reported an office vacancy rate of 20.6% and an average asking rental rate of $38.81 psf. As of the February 2022 reserve report, the borrower has drawn on approximately $8.3 million of the $25.0 million TI/LC reserve set aside at closing, with the reserve showing a current balance of $16.7 million.

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, X-NCP, and A-IO are 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.

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

The DBRS Morningstar 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 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.

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