Morningstar DBRS Finalizes Provisional Credit Ratings on BX Trust 2025-LIFE

DBRS, Inc. (Morningstar DBRS) finalized its provisional credit ratings on the following classes of Commercial Mortgage-Pass Through Certificates, Series 2025-LIFE (the Certificates) issued by BX Trust 2025-LIFE:

-- Class A at AAA (sf)
-- Class B at AA (low) (sf)

All trends are Stable.

The single-asset/single-borrower transaction is collateralized by the borrower's sub-leasehold interest in an eight-property portfolio known as University Park in Cambridge, Massachusetts. The portfolio totals 1.3 million square feet (sf) of life sciences office and laboratory space and two parking structures. Massachusetts Institute of Technology (MIT) holds the leased fee interest, and all ground leases expire in April 2099. The sponsor is BioMed Realty, L.P. (BioMed), a Blackstone Real Estate portfolio company, which has owned the collateral since March 2021. In 2024, BioMed elected to extend the ground leases until April 2099 and prepaid the ground rent for the first eight years, starting in June 2024, and for the final 25 years of the extended ground lease.

The portfolio is 95.9% occupied and leased to 12 tenants. The largest tenant, Takeda Pharmaceutical Company Limited (Takeda), occupies 37.7% of the total net rentable area (NRA) and has been at the property since 1999. Takeda occupies three buildings across the property and has several leases, the first of which expires in June 2030. The property also serves as the headquarters for five of the 12 tenants on site, and 47.9% of the total NRA is occupied by investment-grade tenants. The rent roll includes other companies such as Agios Pharmaceuticals, Inc., Blueprint Medicines Corporation, and Brigham and Women's Hospital. While the property's rent roll is strong with investment-grade tenants, there is 100% lease rollover during the loan term.

The collateral includes the sub-leasehold interest and MIT owns the land. The ground rent is composed of a fixed payment and percentage of the rental income, less financing costs and tenant improvements (Tis). While the actual percentage payment may change year to year, BioMed negotiated the prepayment terms in connection with its lease extension. BioMed paid approximately $234 million in connection with the ground lease extension and prepayment, and Morningstar DBRS understands that all payments have been made. The offering documents detail the specifics of the ground lease and prepayment and describe the extenuating circumstances in which a true-up of the prepayment may apply. The agreement between MIT and the collateral is uniquely aligned because they mutually benefit from the collateral's success; MIT wants the companies there to attract students and/or professors, and the life sciences companies that choose to occupy the collateral benefit from having access to top talent at a university like MIT.

Similarly, Boston, and specifically Cambridge, is a prominent life sciences market largely because of the proximity to elite research institutions like Harvard University and MIT. The life sciences industry has benefited from public-private partnerships, which have been integral to the sector's growth and scale. Public institutions like the National Institutes of Health (NIH) are inclined to fund private research in the industry because the findings have the potential to benefit the public at large. In recent months, the U.S. government has made an effort to reduce this funding, specifically targeting budget cuts within the NIH. The NIH is the largest supporter of biomedical research in the world, and more than 80% of the NIH's budget goes to universities and research institutes outside the NIH. The political landscape is evolving, and there is an element of uncertainty regarding how the NIH's funding may change and directly or indirectly affect the tenants at the property.

Morningstar DBRS' credit ratings on the Certificates address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations are the related Principal Distribution Amounts and the Interest Distribution Amounts for the rated classes.

Morningstar DBRS' credit ratings do not address non-payment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations. For example, the credit ratings do not address Yield Maintenance Default Premiums.

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 factor(s) 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): https://dbrs.morningstar.com/research/437781

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 Single-Asset/Single-Borrower Ratings Methodology (February 28, 2025): https://dbrs.morningstar.com/research/448962

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

With regard to due diligence services, Morningstar DBRS was provided with the Form ABS Due Diligence-15E (Form-15E), which contains a description of the information that a third party reviewed in conducting the due diligence services and a summary of the findings and conclusions. While due diligence services outlined in Form-15E do not constitute part of Morningstar DBRS' methodology, Morningstar DBRS used the data file outlined in the independent accountant's report in its analysis to determine the credit ratings referenced herein.

The credit rating was initiated at the request of the rated entity.

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

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

This is a solicited credit rating.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings

A provisional credit rating is not a final credit rating with respect to the above-mentioned securities and may change or be different than the final credit rating assigned or may be discontinued. The assignment of the final credit ratings on the above-mentioned securities is subject to receipt by Morningstar DBRS of all data and/or information and final documentation that Morningstar DBRS deems necessary to finalize the credit ratings.

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

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

-- North American Commercial Mortgage Servicer Rankings (August 23, 2024),
https://dbrs.morningstar.com/research/438283
-- Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (September 19, 2024),
https://dbrs.morningstar.com/research/439702
-- Legal Criteria for U.S. Structured Finance (December 3, 2024),
https://dbrs.morningstar.com/research/444064

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