DBRS Morningstar Confirms Ratings on MF1 2021-FL7, Ltd.

DBRS Limited (DBRS Morningstar) confirmed its ratings on the following classes of notes issued by MF1 2021-FL7, Ltd. (MF1 or the Issuer):

-- 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 (high) (sf)
-- Class G at BB (low) (sf)
-- Class H 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 September 2021 with an initial collateral pool of 49 floating-rate mortgage loans secured by 67 transitional multifamily properties and six senior housing properties totaling $1.9 billion (70.6% of the fully funded balance), excluding $159.5 million of remaining future funding commitments and $626.4 million of pari passu debt. Most loans were in a period of transition with plans to stabilize and improve asset value. The transaction included a 120-day ramp-up acquisition period following the closing date, which was completed in February 2022 when the cumulative loan balance totaled $2.25 billion. The transaction is structured with a Reinvestment Period through the September 2023 Payment Date, whereby the Issuer may acquire Funded Companion Participations into the trust.

As of the June 2022 remittance, the pool comprises 57 loans secured by 94 properties with a cumulative trust balance of $2.2 billion. Since issuance, two loans have successfully repaid from the pool. The Reinvestment Account has a current balance of $10.1 million. In general, borrowers are progressing toward completing the stated business plans, as through May 2022 the collateral manager had released $68.5 million in loan future funding to 35 individual borrowers to aid in property stabilization efforts. An additional $140.3 million of unadvanced loan future funding allocated to 41 individual borrowers remains outstanding.

The transaction is concentrated by property type as 55 loans are secured by multifamily properties, totaling 95.5% of the current trust balance, and two loans are secured by senior housing properties, totaling 4.5% of the current trust balance. The transaction is also concentrated by loan size, as the largest 10 loans represent 41.5% of the pool. No loans are in special servicing and eight loans are on the servicer’s watchlist, representing 12.8% of the current balance, as of the June 2022 remittance. These loans have been flagged due to low occupancy rates and/or DSCR figures, which is expected as the borrower’s on the respective loans are continuing to progress through the individual business plans. In addition, since issuance, no loans have received a forbearance and one loan has been modified with a maturity extension.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/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.

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 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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