DBRS Morningstar Confirms All Ratings on Manhattan West 2020-1MW Mortgage Trust

DBRS Inc. (DBRS Morningstar) confirmed its ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2020-1MW issued by Manhattan West 2020-1MW Mortgage Trust:

-- Class A at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BBB (low) (sf)
-- Class HRR at BB (high) (sf)
-- Class X at AAA (sf)

All trends are Stable.

The rating confirmations reflect the stable performance of the transaction, which remains in line with DBRS Morningstar’s expectations. The transaction is collateralized by a trophy 70-story Class A office building in the Hudson Yards submarket of Manhattan. The building was delivered to market in July 2019, with physical occupancy and tenant build-outs occurring through Q3 2020. The asset is a component of Brookfield Property Partners L.P.'s (BPY) larger Manhattan West mixed-use development project.

The asset benefits from long-term, institutional-grade tenancy with a weighted-average remaining lease term of roughly 16 years. There is virtually zero lease rollover during the loan term and existing tenants have contractual rent increases built into many of their leases. The earliest scheduled lease expirations of any of the major tenants (Skadden, E&Y, Accenture, NHL, McKool Smith, and W.P. Carey), which together are responsible for 94.5% of base rent, is almost eight full years after loan maturity. Nonetheless, the property's tenancy is heavily concentrated, with the top three tenants (Skadden, E&Y, and Accenture) accounting for 74.5% of the building's net rentable area and 76.8% of base rent.

According to the March 2022 rent roll, the property had a physical occupancy rate of 96.6% with an average rental rate of $91.03 per square foot. The servicer reported the net cash flow and debt service coverage ratio at $105.3 million and 2.96 times (x), respectively, for YE2021, compared with $34.6 million and 0.97x, respectively, for YE2020, reflecting stabilization post build-out of the tenanted spaces.

The Hudson Yards submarket has become one of the most desirable office locations in Manhattan as large space users have opted to move west and sign major leases. In addition, the transaction benefits from strong, experienced institutional sponsorship in the form of a joint venture partnership between BPY and the Qatar Investment Authority. BPY, together with its affiliate Brookfield Asset Management, is one of the largest commercial landlords in New York City. BPY's core office portfolio includes interests in 134 Class A office buildings totalling 72.6 million square feet in gateway markets around the world.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factor(s) 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.

Class X is an interest-only (IO) certificate that references 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 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 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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