DBRS Morningstar Confirms All Ratings of LIFE 2021-BMR Mortgage Trust

DBRS Limited (DBRS Morningstar) confirmed its ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2021-BMR issued by LIFE 2021-BMR Mortgage Trust:

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

All trends are Stable.

The rating confirmations and Stable trends reflect DBRS Morningstar’s expectations of the performance of the portfolio to remain stable given the limited rollover risk through the fully extended loan term, locations within the most prominent life sciences hubs across the United States, and the loan sponsorship in BioMed Realty, an affiliate of BlackStone Group.

The $2.0 billion underlying loan is interest only and is structured with a floating rate, with an interest rate cap of 3.5%. The loan has a partial pro rata structure that allows for paydowns on the first 30.0% of the principal balance, and will switch to a sequential pay structure for the remaining balance. This structure is penalized in DBRS Morningstar’s analysis given the reduced paydown to the senior bonds for those properties released before the sequential pay threshold is met. The loan is scheduled to mature in March 2023 and has three one-year extension options. At issuance, the transaction was secured by a portfolio of 17 properties totaling approximately 2.4 million square feet (sf) of Class A office and laboratory space in the most prominent life sciences hubs, Cambridge, Massachusetts; San Diego; and San Francisco. Since issuance, two properties, totaling 5.3% of net rentable area (NRA;124,053 sf), have been released from the portfolio, resulting in a collateral reduction of 1.7% since issuance with a current trust balance of $1.98 billion.

The loan is being monitored on the servicer’s watchlist for the upcoming maturity date, and DBRS Morningstar expects the sponsor will exercise the first of the three extension options available. As of September 2022, the property remains 100% occupied, and the largest tenants include Shire Human Genetic Therapies Inc. (20.4% of the NRA; expiring July 2033), Illumina, Inc (14.1% of the NRA; expiring December 2027), and Life Technologies (9.1% of the NRA; expiring March 2028). The trailing-12 months (T-12) ended September 30, 2022, net cash flow, and debt service coverage ratio were $135.9 million and 3.13 times, respectively, and both figures remain in line with prior years. As noted at issuance, the portfolio benefits from limited rollover risk through the fully extended loan term, with a weighted-average remaining lease term of 6.5 years, and a high concentration of rental income (60% of base rents) coming from investment-grade tenants. Additionally, the three life sciences hubs where the collateral properties are located, particularly Cambridge, continue to benefit from low vacancy rates and high barriers to entry. According to CBRE, Class A office properties within the Cambridge submarket reported a vacancy rate of 6.1%.

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/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings (May 17, 2022).

All ratings are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by DBRS Morningstar.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is North American CMBS Surveillance Methodology (October 3, 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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