DBRS Morningstar Confirms All Ratings on Benchmark 2021-B25 Mortgage Trust Amazon Seattle Loan-Specific Certificates

DBRS Limited (DBRS Morningstar) confirmed its ratings on the following classes of Amazon Seattle Loan-Specific Certificates issued by Benchmark 2021-B25 Mortgage Trust:

-- Class 300P-A at AA (low) (sf)
-- Class 300P-B at A (low) (sf)
-- Class 300P-C at BBB (low) (sf)
-- Class 300P-D at BB (low) (sf)
-- Class 300P-E at B (high) (sf)
-- Class 300P-RR at B (high) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the loan, which is consistent with DBRS Morningstar’s expectations at issuance. The Amazon Seattle Loan-Specific Certificates are secured by the fee-simple interest in Amazon Seattle as well as its leasehold interest under a parking lease covering certain spaces at an adjacent parking garage. Amazon Seattle is a newly redeveloped Class A office building in the heart of the Seattle central business district and is composed of approximately 680,00 square feet (sf) of office space and 94,000 sf of retail space. The $455 million whole loan is composed of $234.9 million of senior A notes, one junior B note of $155.1 million (the Amazon Seattle Trust Subordinate Companion Loan), and a mezzanine loan of $65 million. The Amazon Loan-Specific Certificates will total $155.1 million and will be collateralized by only the Amazon Seattle Trust Subordinate Companion Loan. The Amazon Seattle loan is structured with an anticipated repayment date in April 2030 and a final maturity date in May 2033.

The property was originally constructed in 1929 as the flagship location of prominent Seattle-based department store The Bon Marché and has since been granted landmark status by the city of Seattle. The building continued to function in the same capacity as the Macy’s building until 2017 when the property’s seller began a three-phase, comprehensive transformation to convert it into office space for Amazon. The previous owner completed Phase I and II of the reposition with $160.0 million invested in new build-out, building infrastructure, and amenity enhancements. Phase III, the final phase of the repositioning project, which entails Amazon’s final expansion and conversion, was scheduled to be completed in August 2021. The total cost of the project was estimated to be more than $225.0 million with Amazon reportedly contributing an additional $250 per sf on its overall space. DBRS Morningstar has received confirmation from the servicer that Phase III has been completed and all of Amazon’s space delivered.

According to the September 2021 rent roll, the property was 91.5% occupied with Amazon occupying 84.8% of the net rentable area. Despite the disruptions surrounding the Coronavirus Disease (COVID-19) pandemic and resulting government restrictions, the collateral has been largely unaffected. However, recent news articles have reported spikes in violent crime in the downtown Seattle area, particularly on the blocks surrounding the property, which have resulted in Amazon's permitting employees to work from home until the situation improves. Amazon has also reportedly offered alternative office space elsewhere for its employees. Amazon’s triple net lease extends through May 2033 with three five-year renewal options available. There are no future termination options or outs in the lease. The DBRS Morningstar net cash flow of $24.9 million gives straight-line credit to Amazon’s rent over the loan term given its consideration as a long-term credit tenant.

ESG CONSIDERATIONS
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.

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

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 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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