Morningstar DBRS Confirms All Credit Ratings on Arbor Multifamily Mortgage Securities Trust 2021-MF2

DBRS Limited (Morningstar DBRS) confirmed all credit ratings on the classes of Multifamily Mortgage Pass-Through Certificates, Series 2021-MF2 issued by Arbor Multifamily Mortgage Securities Trust 2021-MF2 as follows:

-- Class A-1 at AAA (sf)
-- Class-A2 at AAA (sf)
-- Class-A3 at AAA (sf)
-- Class-A4 at AAA (sf)
-- Class-A5 at AAA (sf)
-- Class-ASB at AAA (sf)
-- Class-AS at AAA (sf)
-- Class-XA at AAA (sf)
-- Class-B at AAA (sf)
-- Class-XB at AA (sf)
-- Class-C at AA (low) (sf)
-- Class-D at A (sf)
-- Class-XD at A (low) (sf)
-- Class-E at BBB (high) (sf)

All trends are Stable.

The credit rating confirmations reflect Morningstar DBRS' stable outlook for the transaction, with only a small concentration of loans, representing 3.8% of the pool, on the servicer's watchlist and no delinquent or specially serviced loans. Overall, the pool continues to exhibit healthy credit metrics, as evidenced by the weighted-average (WA) occupancy rate for all properties above 96.0% and the WA debt service coverage ratio (DSCR) of approximately 1.80 times (x) for all loans based on the most recent year-end financials.

The transaction consists primarily of loans secured by multifamily assets (94.9% of the pool), with one multifamily/retail mixed-use property (3.8% of the pool) and one manufactured housing property (1.3% of the pool). According to the September 2024 remittance, all 32 of the original loans remain in the pool. There has been minimal collateral reduction of only 0.5% from issuance as the majority of the loans are structured with full-term or partial-term interest-only (IO) periods.

The larger of the two watchlisted loans, Maclellan Apartments (Prospectus ID#16; 2.4% of the pool), is secured by an 85-unit apartment building in Chattanooga, Tennessee. The loan has been monitored on the servicer's watchlist since August 2023 for a low DSCR, following a burst sprinkler in December 2022 that flooded 12 units and a few amenity spaces. According to the servicer, insurance proceeds have been issued and remediation was noted to be nearly complete as of February 2024. As of Q2 2024, the property was 82% occupied with a DSCR of 0.95x, however, Morningstar DBRS expects performance will return to issuance levels of 94.0% and 1.25x, respectively, once the damaged units become available again.

Morningstar DBRS' credit ratings on the applicable classes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transactions' respective press releases at issuance.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.
 
A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024) at https://dbrs.morningstar.com/research/437781.

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

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

The principal methodology is North American CMBS Surveillance Methodology (March 1, 2024), https://dbrs.morningstar.com/research/428798.

Other methodologies referenced in this transaction are listed at the end of this press release.

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-DBRS@morningstar.com.

The credit ratings were initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for these credit rating actions.

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with these credit rating actions.

These are solicited credit ratings.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

-- North American CMBS Multi-Borrower Rating Methodology (March 1, 2024)/North American CMBS Insight Model v 1.2.0.0, https://dbrs.morningstar.com/research/428797
-- Rating North American CMBS Interest-Only Certificates (June 28, 2024), https://dbrs.morningstar.com/research/435294
-- North American Commercial Mortgage Servicer Rankings (August 23, 2024), https://dbrs.morningstar.com/research/438283
-- Legal Criteria for U.S. Structured Finance (April 15, 2024), https://dbrs.morningstar.com/research/431205
-- Morningstar DBRS Commercial Real Estate Property Analysis Criteria (September 19, 2024), https://dbrs.morningstar.com/research/439702

A description of how Morningstar DBRS analyzes structured finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/417279. (July 17, 2023)

For more information on this credit or on this industry, visit https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.