DBRS Morningstar Confirms All Classes of BBCMS Mortgage Trust 2020-C7

DBRS Limited (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass-Through Certificates, Series 2020-C7 issued by BBCMS Mortgage Trust 2020-C7 Trust as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-5 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class A-S at AAA (sf)
-- Class B at AA (high) (sf)
-- Class C at A (high) (sf)
-- Class D at BBB (low) (sf)
-- Class X-E at BB (high) (sf)
-- Class E at BB (sf)
-- Class X-F at B (high) (sf)
-- Class F at B (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction. At issuance, the transaction consisted of 49 fixed-rates loans secured by 153 commercial and multifamily properties with a trust balance of $807.8 million. According to the April 2021 remittance, all loans remain in the pool and there has been negligible amortization to date. The transaction is concentrated by property type as 10 loans, representing 26.1% of the current trust balance, are secured by office collateral, while the second-largest concentration comprises nine loans, representing 25.3% of the current trust balance, secured by multifamily collateral. The transaction does not include any loans secured by lodging properties and only six loans, representing 6.1% of the pool, are secured by retail properties. Five loans, representing 13.5% of the pool, are on the servicer’s watchlist. These loans are being monitored primarily for low debt service coverage ratios (DSCR).

At issuance, DBRS Morningstar shadow rated six loans investment grade, including Parkmerced (Prospectus ID#1, 7.4% of the pool), 525 Market Street (Prospectus ID#2, 7.4% of the pool), The Cove at Tiburon (Prospectus ID#3, 6.2% of the pool), Acuity Portfolio (Prospectus ID#8, 5.0% of the pool), F5 Tower (Prospectus ID#8, 4.9% of the pool), and 650 Madison Avenue (Prospectus ID#13, 2.7% of the pool). DBRS Morningstar maintained the shadow ratings on all six loans with this review.

The Parkmerced loan, secured by a 3,165-unit apartment complex in San Francisco was added to the watchlist in March 2021 for declines in occupancy and cash flow. As of the Q3 2020 financials, the loan reported a DSCR of 0.85 times and an occupancy rate of 75%. The property was 94.3% occupied at issuance and is well located near San Francisco State University, with downtown San Francisco to the northeast and Silicon Valley to the south. According to Reis, the West San Francisco submarket reported a Q1 2021 vacancy rate of 1.7% and is expected to increase marginally over the next five years. At issuance, management was beginning a strategic shift from a rental residence to a modern, higher-rent property that can tap into the affluent demographic of the city as leases roll. DBRS Morningstar views the occupancy decline as a temporary event given the gradual shift to a higher-rent property and the submarket’s tight vacancy rates. DBRS Morningstar maintained the investment-grade shadow rating as part of this review.

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.

Classes X-A, X-B, X-E, and X-F are interest-only (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. 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 26, 2021), 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.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.

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. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The DBRS Morningstar long-term rating scale definition indicates that ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

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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