DBRS Morningstar Confirms All Ratings on Wells Fargo Commercial Mortgage Trust 2021-C60

DBRS Limited (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass-Through Certificates, Series 2021-C60 issued by Wells Fargo Commercial Mortgage Trust 2021-C60 as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class X-A at AAA (sf)
-- Class A-S at AAA (sf)
-- Class B at AAA (sf)
-- Class X-B at AA (sf)
-- Class C at AA (low) (sf)
-- Class X-D at AA (low) (sf)
-- Class D at A (high) (sf)
-- Class E-RR at A (low) (sf)
-- Class F-RR at BBB (high) (sf)
-- Class G-RR at BBB (sf)
-- Class H-RR at BB (high) (sf)
-- Class J-RR at BB (high) (sf)
-- Class K-RR at BB (low) (sf)
-- Class L-RR at B (low) (sf)

All trends are Stable. The confirmations and Stable trends reflect a deal that is early in its lifecycle with limited reporting and no changes to the performance of the underlying portfolio from issuance.

At issuance, the collateral consisted of 61 fixed-rate loans, secured by 105 commercial and multifamily properties with an initial trust balance of $748.6 million. As of the April 2022 remittance, all of the original 61 loans remain outstanding, with a total trust balance of $746.3 million, down from $748.6 million at issuance. Twenty-nine loans representing 59.6% of the pool are interest-only (IO) for the full term. An additional 16 loans representing 21.9% of the pool are structured with partial interest-only terms, only two of which have begun amortizing. The pool is concentrated by property type, with retail, multifamily, industrial, and office assets representing, 25.9%, 23.0%, 15.6%, and 13.6%, respectively, of the current pool balance. Despite the portfolio’s high concentration of retail properties, 74.3% of retail collateral is secured by anchored or shadow-anchored properties, and 42.9% of the overall retail concentration have sponsors that DBRS Morningstar deems to be Strong. One loan, The Westchester (2.7% of the total pool balance), is secured by a regional mall.

There are no loans in special servicing, but there are six loans, representing 7.2% of the current pool balance, on the servicer’s watchlist. The largest loan on the servicer’s watchlist, Rollins Portfolio (3.3% of the current pool balance), is backed by a portfolio of 14 flex-industrial buildings throughout Northern California. As of April 2022, the loan was delinquent on county taxes. The servicer has contacted the borrower regarding the delinquency, and proof of payment has been requested. The second largest loan on the servicer’s watchlist, TownePlace Suites Laplace (1.1% of the current pool balance), is backed by a 93-key lodging property in LaPlace, Los Angeles. The property was affected by Hurricane Ida in August 2021 and sustained major water damage due to a lost roof caused by the storm. A new roof was scheduled to be installed in September 2021, and DBRS Morningstar will continue to monitor the loan for confirmation that repairs have been completed.

At issuance, one loan—The Grace Building (6.7% of the current pool balance)—exhibited credit characteristics consistent with an investment-grade shadow rating of A (sf). The 48-story Class A office tower is on the northern edge of Bryant Park in Manhattan. As of December 2021, the property was 99.0% leased to a granular rent roll of tenants, including the Bank of America and Bain & Company. Credit metrics for the loan remain strong, with both cash flow and the debt service coverage ratio (2.16 times as of YE2021) in line with expectations at issuance. With this review, DBRS Morningstar confirms that the characteristics of this loan remain consistent with the investment-grade shadow rating.

ESG CONSIDERATIONS
There were no Environmental, Social, or Governance factors that had a significant or relevant effect on the credit analysis.

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/396929.

Classes X-A, X-B, and X-D 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.

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.

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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