Surveillance Performance Update
FS Rialto 2022-FL6 Issuer, LLC
Rating Action Summary
DBRS Limited (DBRS Morningstar) confirmed the credit ratings on all classes of notes issued by FS Rialto
2022-FL6 Issuer, LLC (FS RIAL 2022-FL6). All trends are Stable. The rating confirmations reflect the
overall stable performance of the transaction, which remains in line with DBRS Morningstar’s
expectations.
Participants
Issuer
FS Rialto 2022-FL6 Issuer, LLC
Mortgage Loan Seller
FS CREDIT Finance Holdings LLC
Master Servicer
Wells Fargo Bank, National Association
Special Servicer
Rialto Capital Advisors, LLC
Collateral Manager
FS Credit REIT
Advancing Agent
FS Credit REIT
The transaction closed in August 2022 with a cut-off pool balance totalling $750.0 million, excluding
approximately $175.4 million of future funding commitments and $1.3 billion of pari passu debt. At
issuance, the pool consisted of 24 floating-rate mortgage loans secured by 58 mostly transitional
properties. Two loans (NYC Multifamily Portfolio and NYC Midtown West Multifamily Portfolio) are
cross-collateralized loans but are treated as a single loan in DBRS Morningstar’s analysis, resulting in a
modified loan count of 23. All figures noted below reflect this modified loan count. As of September
2023, the pool’s composition remains unchanged. No loans have been fully repaid, nor have any been
added to the trust since issuance.
Pool Characteristics
Trust Amount ($)
750,000,000
Top 10 Loan Concentration (%)
56.1
Number of Loans
24
Par Value Trigger (%)
117.2
Number of Properties
58
Initial Par Value Ratio (%)
119.6
Managed/Static
Managed
Current Par Value Ratio (%)
119.6
Replenishment Allowed
Y
ICR Value Trigger (%)
120.0
Reinvestment and/or Replenishment End Date
Aug-24
Initial ICR Value Ratio (%)
137.6
Current Cash Reinvestment Account Balance ($)
0
Current ICR Value Ratio (%)
138.7
WA As-Is Appraised Issuance LTV (%)
69.7
WA Stabilized Appraised Issuance LTV (%)
63.0
WA As-Is Appraised Current LTV (%)
69.8
WA Stabilized Appraised Current LTV (%)
63.3
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Capital Structure
Class
Issuance
Balance ($)
Current
Balance ($)
Original
Subordination
(%)
Current
Subordination
(%)
DBRS
Morningstar
Original Rating
DBRS
Morningstar
Current Rating
Current
Trend
DBRS
Morningstar
Last Action
DBRS
Morningstar Last
Action Date
Class A Notes
349,375,000
349,375,000
46.75
46.75
AAA (sf)
AAA (sf)
Stable
Confirmed
October 17, 2023
Class A-CS Notes
50,000,000
50,000,000
46.75
46.75
AAA (sf)
AAA (sf)
Stable
Confirmed
October 17, 2023
Class A-S Notes
90,938,000
90,938,000
34.62
34.62
AAA (sf)
AAA (sf)
Stable
Confirmed
October 17, 2023
Class B Notes
33,750,000
33,750,000
30.12
30.12
AA (low) (sf)
AA (low) (sf)
Stable
Confirmed
October 17, 2023
Class C Notes
42,187,000
42,187,000
24.50
24.50
A (low) (sf)
A (low) (sf)
Stable
Confirmed
October 17, 2023
Class D1 Notes
34,688,000
34,688,000
19.87
19.87
BBB (high) (sf)
BBB (high) (sf)
Stable
Confirmed
October 17, 2023
Class D2 Notes
13,125,000
13,125,000
18.12
18.12
BBB (sf)
BBB (sf)
Stable
Confirmed
October 17, 2023
Class E Notes
13,125,000
13,125,000
16.37
16.37
BBB (low) (sf)
BBB (low) (sf)
Stable
Confirmed
October 17, 2023
Class F Notes
39,375,000
39,375,000
11.12
11.12
BB (low) (sf)
BB (low) (sf)
Stable
Confirmed
October 17, 2023
Class G Notes
24,374,000
24,374,000
7.88
7.88
B (low) (sf)
B (low) (sf)
Stable
Confirmed
October 17, 2023
Class H Notes
59,063,000
59,063,000
0.00
0.00
The transaction is a managed vehicle, structured with a 24-month reinvestment period, that is scheduled
to end with the August 2024 payment date. During this period, the issuer may acquire reinvestment
collateral interests, which may include funded companion participations, subject to the eligibility criteria
and acquisition criteria as defined at closing. As of the September 2023 remittance, there are no funds in
the reinvestment account. The loans are mostly secured by cash-flowing assets, many of which are in a
period of transition with plans to stabilize and improve underlying asset value.
In general, borrowers are making progress toward completing their stated business plans at loan
closing. Through September 2023, the collateral manager had advanced cumulative loan future funding
of $64.4 million to 14 of the outstanding individual borrowers. The two loans with the largest future
funding advances to date are the NYC Multifamily Portfolio loan ($17.2 million) and Nob Hill Apartments
loan ($17.7 million). These loans are secured by multifamily properties in New York and Houston, with
the borrowers using future funding advances to renovate and upgrade unit interiors and tenant
amenities as well as upgrade exterior items across the respective properties. An additional $119.3
million of loan future funding allocated to 16 individual borrowers remains outstanding. The largest
individual allocation of unadvanced future funding, $25.7 million, is to the borrower of the Ashcroft
Portfolio loan. The Ashcroft Portfolio consists of five multifamily properties totaling 1,688 units
throughout Georgia and Texas. At issuance, the borrower’s business plan contemplated a $30.9 million
capital improvement plan to renovate 100.0% of unit interiors and exteriors to achieve both average
renovation premiums above current market rents and a stabilized occupancy rate of 95.0%. As of
September 2023, 604 units have been renovated with another 71 units currently undergoing
renovations. The borrower noted that completed units are achieving average rent premiums that are
relatively in line with expectations.
The pool is concentrated by multifamily properties as 18 loans, representing 82.4% of the current trust
balance, are secured by traditional multifamily assets. The remaining property type concentrations are
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relatively granular with two loans, representing 9.3% of the current pool balance secured by industrial
assets; one loan, representing 4.5% of the current pool balance secured by a lodging property; and the
remaining two loans, representing 3.8% of the current pool balance, secured by office assets. The pool is
composed of properties located primarily in suburban markets, i.e., those identified with a DBRS
Morningstar Market Rank of 3, 4, and 5. As of September 2023, these included 18 loans, representing
68.9% of the current trust balance. The transaction is also concentrated by loan size, as the 10 largest
loans represent 56.1% of the pool. According to the September 2023 reporting, the WA as-is appraised
LTV was 69.89% and the WA stabilized appraised LTV was 63.3%. This compares with 69.7% and 63.0%,
respectively, at closing.
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Transaction Summary
Exhibit 1 Property Type Concentration
Source: DBRS Morningstar.
Property Type Concentration
At Issuance
As of September 2023 Remittance
# of Loans
% of Pool
# of Loans
% of Pool
Limit (%)
Hotel
1
4.5
1
4.5
15.0
Retail
0
0.0
0
0.0
10.0
Office
2
3.8
2
3.8
20.0
Multifamily
19
82.1
19
82.4
100.0
Mixed Use
0
0.0
0
0.0
15.0
Industrial
2
9.6
2
9.3
20.0
Self-Storage
0
0.0
0
0.0
15.0
Student Housing
0
0.0
0
0.0
5.0
0
20
40
60
80
100
120
Hotel Retail Office Multifamily Mixed Use Industrial Self Storage Student Housing
Percent of Pool
Property Type
At Issuance Sep-23 Limit
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Exhibit 2 DBRS Morningstar Market Rank
Source: DBRS Morningstar.
DBRS Morningstar Market Rank
At Issuance
As of September 2023 Remittance
# of Loans
% of Pool
# of Loans
% of Pool
1
0
0.0
0
0.0
2
2
9.8
2
9.8
3
8
32.8
8
32.8
4
5
14.1
5
14.3
5
5
22.0
5
21.7
6
1
6.7
1
6.7
7
0
0.0
0
0.0
8
3
14.6
3
14.6
0
5
10
15
20
25
30
35
1 2 3 4 5 6 7 8
Percent of Pool
DBRS Morningstar Market Rank
At Issuance Sep-23
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Exhibit 3 State Concentration
Source: DBRS Morningstar.
State Concentration
At Issuance
As of September 2023 Remittance
# of Loans
% of Pool
# of Loans
% of Pool
TX
7
21.0
7
21.1
NY
5
27.9
5
27.9
CA
3
12.3
3
12.0
TN
2
6.8
2
6.8
CO
1
5.0
1
5.0
Other
6
27.0
6
27.2
0
5
10
15
20
25
30
TX NY CA TN CO Other
Percent of Pool
State
At Issuance Sep-23
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Current Loan Status
Loan Status
# of Loans
% of Pool
Delinquent
0
0.0
Specially Serviced
0
0.0
REO
0
0.0
Modified or Forborne
3
4.4
Servicer's Watchlist
9
40.3
As of the September 2023 reporting, there are no delinquent or specially serviced loans; however, nine
loans, representing 40.3% of the current pool balance, are on the servicer’s watchlist. The majority of
these loans were added to the servicer’s watchlist between June and August 2023 as a result of
declining DSCRs, primarily related to increases in debt service obligations on the floating-rate loans.
Three loans have been modified, the largest of which, 2704 CDMX Apartments, was modified to allow
the property to enter a Public Facility Corporation program, an economic tool designed to promote the
development of mixed-income housing in Texas. The two other loans, Nob Hill and La Mirada, were
modified to allow the borrowers the ability to purchase shorter term interest-rate cap agreements. To
date, there have not been any payment-related loan modifications.
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Future Funding Releases
Loan
Trust Balance at
Contribution ($)
Percent of Pool
at Contribution
(%)
Future Funding
Available at
Loan Closing ($)
Future Funding Purpose
Future Funding
Released Since
Loan Closing
($)
Current
Trust
Balance ($)
Current
Percent
of Pool
(%)
Future
Funding
Outstanding
($)
NYC Multifamily Portfolio
32,033,089
4.3
9,172,937
Capital Improvements
7,693,172
40,041,361
5.3
1,479,765
NYC Midtown West
Multifamily Portfolio
28,935,604
3.9
13,327,063
Capital Improvements
9,475,234
36,169,505
4.8
3,851,829
Ashcroft Portfolio
41,871,442
5.6
28,877,550
Capital Improvements
3,158,402
52,339,303
7.0
25,719,148
Reserve at Oakleigh
31,275,176
4.2
2,730,000
Capital Improvements
922,756
39,093,970
5.2
1,807,244
Arboreta Apartments
30,239,556
4.0
4,280,000
Capital Improvements,
Interest Reserve
2,719,709
37,799,445
5.0
1,560,291
Amazon Middletown
30,147,438
4.0
22,000,000
Capital Improvements,
Leasing Costs
0
37,684,298
5.0
22,000,000
Urban Palms
29,812,467
4.0
9,250,000
Capital Improvements
2,569,523
37,265,584
5.0
6,680,477
Northtown
27,216,438
3.6
13,600,000
Leasing Costs
0
31,762,978
4.2
13,600,000
West Hills Portfolio
25,368,511
3.4
9,960,000
Capital Improvements
4,443,793
31,710,639
4.2
5,516,207
The Commons - Jacksonville
24,720,900
3.3
8,000,000
Capital Improvements
4,920,862
30,901,124
4.1
3,079,138
LBJ Station
22,443,093
3.0
1,800,000
Capital Improvements
278,090
28,185,963
3.8
1,521,910
The Landing
19,260,863
2.6
3,000,000
Capital Improvements
1,213,125
24,401,093
3.3
1,786,875
Lawrence Station
13,404,489
1.8
19,573,000
Leasing Costs
0
16,755,611
2.2
19,573,000
3500 The Vine
12,820,672
1.7
3,750,000
Capital Improvements
2,499,275
17,525,114
2.3
1,250,725
Southwind Office Center
9,577,395
1.3
4,000,000
Leasing Costs
2,883,150
11,971,743
1.6
1,116,850
Nob Hill
5,564,831
0.7
23,900,000
Capital Improvements
17,743,095
7,257,223
1.0
6,156,905
La Mirada
2,936,451
0.4
6,551,065
Capital Improvements
3,905,659
3,670,563
0.5
2,645,406
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Top 10 Loan Summary
Loan Name
Current
Trust
Balance ($)
% of
Pool
DBRS
Morningstar
As-Is DSCR
(x)
DBRS
Morningstar
Stabilized
DSCR (x)
DBRS
Morningstar
As-Is LTV
(%)
DBRS
Morningstar
Stabilized
LTV (%)
DBRS
Morningstar
Business Plan
Score
NYC Portfolio
76,210,866
10.2
0.57
1.12
67.2
58.8
2.33
Ashcroft Portfolio
52,339,303
7.0
0.78
0.83
79.9
63.6
1.63
Bronx Multifamily
Portfolio
50,301,559
6.7
1.06
1.06
71.0
63.5
1.88
360 Huguenot
48,789,679
6.5
0.42
0.61
61.4
56.1
1.8
Watermark
Apartments
41,353,338
5.5
0.89
0.89
69.2
68.7
1.93
Reserve at Oakleigh
39,093,970
5.2
0.66
0.85
82.9
66.8
2.03
Arboreta Apartments
37,799,445
5.0
0.75
0.89
83.0
65.6
1.88
Amazon Middletown
37,684,298
5.0
0.80
0.80
85.3
85.3
3.28
Urban Palms
37,265,584
5.0
0.58
0.78
93.9
65.8
2.33
Pavilion at the Groves
35,416,262
4.7
0.51
0.67
67.4
67.8
1.83
Loan Name
DBRS
Morningstar
Property
Type
City
State
Year Built
SF/Units
Fully Funded
Mortgage
Loan PSF ($)
Loan Added
During
Reinvestment
Period
NYC Portfolio
MF
New York
NY
1908
495
369,697
Ashcroft Portfolio
MF
Various
Various
2002
1,688
216,594
Bronx Multifamily
Portfolio
MF
Bronx
NY
1976
552
261,159
360 Huguenot
MF
New
Rochelle
NY
2019
280
375,000
Watermark
Apartments
MF
Reseda
CA
2021
250
360,000
Reserve at Oakleigh
MF
Antioch
TN
2016
264
222,538
Arboreta Apartments
MF
Aurora
CO
1972
268
217,034
Amazon Middletown
IN
Middletown
DE
2013
1,015,740
105
Urban Palms
MF
Houston
TX
1977
659
95,068
Pavilion at the Groves
MF
Humble
TX
2022
318
159,591
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Business Plan Updates
NYC Portfolio
Current Trust Balance ($)
76,210,866
Future Funding Outstanding ($)
5,331,594
Fully Funded Loan Balance ($)
183,000,000
This loan is secured by two cross-collateralized and cross-defaulted portfolios totaling 495 residential
and 14 commercial units across 31 Class B properties, located throughout New York City. The overall
portfolio is segmented into four groups: Hell’s Kitchen (18 properties; 297 units), Kips Bay (five
properties; 79 units), Upper West Side (five properties; 73 units), and Upper East Side (three properties,
46 units). Initial loan proceeds of $160.5 million were used to refinance existing debt encumbering both
portfolios, fund the $81.0 million partnership buyout of the prior co-sponsor, cover closing costs, and
establish an interest carry reserve. The loan allows for up to $22.5 million in future funding to be used to
implement the sponsor’s business plan, which includes renovating 305 free market rental rate apartment
units throughout both portfolios to achieve GPR growth. To date, $17.2 million of future funding has
been released, while $5.33 million remains outstanding. In addition to exterior and common area
improvements, planned interior renovations include repainting, updating appliances, new flooring, and
the reconfiguration of select units.
The three-year floating rate loan is structured with two 12-month extension options. The loan is IO
throughout the fully extended loan term and does not allow for individual property releases. According
to the June 2023 rent roll, the portfolio had a combined WA occupancy rate of 82.2%, a decline from
84.7% at the previous quarter and 89.7% at issuance. As of September 2023, 208 units have been
renovated and are achieving rental rate premiums in excess of 15.0%, ranging from $450 per unit (mark-
to-market) to $500 per unit (renovated). In addition, 44 units are undergoing renovations, which are
expected to be completed by the end of November 2023.
According Q2 2023 Reis reporting, the average asking rental rate for similar vintage properties within the
New York Metro market was $3,508 per unit, above the subject portfolio’s average in-place rent of
$2,209 per unit. Multifamily vacancy rates within the New York Metro market continue to remain low at
2.5%. In its analysis, DBRS Morningstar assumed a stabilized average rental rate of $2,690 per unit and
a vacancy rate of 5.0% across the portfolio, compared with the Issuer’s concluded figures of $2,793 per
unit and a 4.0% vacancy rate.
According to the collateral manager’s financials for the T-12 period ended June 30, 2023, the portfolio
generated NCF of $4.8 million, equating to a 1.0x DSCR. Occupancy and NCF have dipped quarter-over-
quarter, which is partially a result of the ongoing renovations as units turn. The sponsor is drawing on
the carry reserve to cover debt service obligations and has indicated that it will replenish the reserve
once the balance drops below $500,000. The sponsor most recently balanced the account in August
2023 and to date, has replenished the reserve account twice for a total of $1.0 million. Furthermore, the
loan has a total of $1.5 million in reserves spread across capital improvement, deferred maintenance,
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and other reserves. DBRS Morningstar assumed a Stabilized NCF of $12.8 at issuance. The property’s in-
place appraised value at closing was $274.16 million, indicative of an LTV of 58.96 %. Given the current
interest and cap rate environments, this valuation may be aggressive. While portfolio cash flows remain
far from stabilized, the sponsor’s renovation plan is still in progress and is relatively conservative in
magnitude. Upon completion, the sponsor plans to increase rents by an average of $500 per month for
renovated units, which appears to be supported by market comparable properties. The resulting loan
expected loss remains below the WA expected loss for the pool.
Ashcroft Portfolio
Current Trust Balance ($)
52,339,303
Future Funding Outstanding ($)
25,719,148
Fully Funded Loan Balance ($)
365,610,184
The loan is secured by five cross-collateralized, garden-style apartment properties totaling 1,688 units
located in the Atlanta and Dallas MSAs. Initial loan proceeds of approximately $336.7 million along with
$126.8 million of borrower equity funded the portfolio purchase for $446.0 million, covered closing costs
of $13.8 million, and funded a $2.0 million working capital reserve. The loan is also structured with a
$28.9 million future funding component ($17,107 per unit), of which $17.0 million was earmarked for
interior unit renovations with $10.3 million allocated toward exterior renovations and common area
upgrades. At issuance, the portfolio was 94.3% occupied with an average rental rate of $1,361 per unit.
The interest-only loan has an initial three-year term and two one-year extension options. To date, $3.2
million of future funding has been released, while $25.7 million remains.
According to the collateral manager’s Q2 2023 update, 604 units have been renovated, while 71 units
are currently undergoing renovations. The borrower has also completed exterior work, including amenity
and signage upgrades. The collateral manager noted that renovated units were achieving a premium of
$176 per unit across the portfolio. As of the June 2023 rent roll, the portfolio was 89.2% occupied with
an average rental rate of $1,408 per unit. At issuance, the sponsor was targeting mark-to-market rent
trade out premiums of $200+ per unit with average renovation premiums of $229 per unit, above market
rents. In its analysis, DBRS Morningstar projected a WA stabilized occupancy and average rental rate of
95.0% and $1,605 per unit, respectively. While the issuer projected a similar occupancy rate, its
stabilized rental rate projection was more aggressive at $1,953 per unit.
The portfolio generated an annualized NCF of $17.2 million as of the trailing six months ended June 30,
2023, resulting in a DSCR of 0.62x. In comparison, the NCF and DSCR at YE2022 were $16.9 million and
2.44x, respectively. The decline in the DSCR was primarily a result of an increase in debt service
obligations, which increased by 100% over the same period due to the loan’s floating rate. At issuance,
DBRS Morningstar concluded a Stabilized NCF of $17.7 million, substantially lower than the Issuer’s
stabilized projection of $25.9 million. At loan closing, the as-is appraised value was $457.8 million,
implying a moderate to high LTV of 73.6%. Based on the annualized T-6 ended June 30, 2023 NCF, the
implied cap rate is 3.7%. The appraiser’s projected stabilized value was $575.0 million, implying a slightly
lower LTV of 63.6%. Although the portfolio’s current market value may have declined given the current
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interest and cap rate environment, the asset is expected to perform well during the loan term. While
DBRS Morningstar notes the implied cap rate may be aggressive, the sponsor has yet to complete its
capex plan, suggesting cash flow growth is possible. According to the CBRE United States H1 2023 Cap
Rate Survey, cap rates ranged between 4.0% and 5.5% for transitional Class-A Value-Add multifamily
properties in the Atlanta and Dallas markets, suggesting that the borrower may be able to execute its
exit strategy if it continues to achieve higher rental rates for renovated properties and/or on a mark-to-
market basis, when units turn.
360 Huguenot
Current Trust Balance ($)
48,789,679
Future Funding Outstanding ($)
0
Fully Funded Loan Balance ($)
105,000,000
This loan is secured by the borrower’s fee-simple interest in 360 Huguenot, a 280-unit, Class-A high-rise
apartment building with approximately 13,500 sf of ground-floor retail. The property is centrally located
within New Rochelle, NY. Amenities include a 24/7 concierge, fitness center with a yoga studio, private
indoor/outdoor resident lounge, and valet parking garage. Additionally, 10% of units (28 total) are
affordable rate apartments subject to rent stabilization requirements. Loan proceeds of $105.0 million
were used refinance $88.0 million of debt encumbering the property, fund an interest and repair reserve,
and return $8.6 million of equity to the sponsor. At issuance, the subject property was 86.8% occupied
with average in-place rents of $2,731 per unit.
The three-year floating-rate loan is structured with two 12-month extension options. There is no future
funding component for this loan; however, the sponsor’s business plan at issuance contemplated
achieving stabilization in year three by increasing rents, burning off collections loss, and leasing up
11,000-sf of vacant ground floor retail space at a rental rate of approximately $30 psf. According to the
Q2 2023 update from the collateral manager, the sponsor has evicted 29 nonpaying tenants to date, with
an additional four evictions scheduled in the coming months. The loan was added to the servicer’s
watchlist in June 2023 because of a drop in the DSCR, which was partially due to a decline in EGI and
increased expenses, and exacerbated by the loan’s floating interest rate. The collateral manager noted
that residential leasing continues to improve with recent trade out premiums capturing net rent growth
of approximately 2.5% year over year. According to the June 2023 rent roll, the property was 88.8%
occupied, a nominal decline from the prior quarter’s occupancy rate of 89.5% but higher than the
occupancy figure at contribution of 77.9%. Retail leasing has not made material progress; however, the
collateral manager noted that one LOI for a potential 3,600-sf lease is being reviewed.
The property generated NCF of $2.5 million as of the YE2022 servicer reporting, resulting in a DSCR of
0.38x. At issuance, DBRS Morningstar concluded a Stabilized NCF of $3.9 million, a -44.6% variance from
the Issuer’s stabilized projection of $7.0 million. At loan closing, the as-is appraised value was $170.9
million, implying a moderate LTV of 61.4%. The appraiser’s projected stabilized value was $187.3 million,
implying a slightly lower LTV of 56.1%. Although cash flow remains below DBRS Morningstar’s
expectations, the sponsor has yet to complete its business plan. Given the eviction moratoriums in New
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York have expired, the sponsor has made progress evicting nonpaying tenants and will likely capture
additional upside as units turn and rents reset to market rates. Even with additional supply to be added
to the submarket over the next few years, DBRS Morningstar believes demand will remain healthy
overall given the subject’s recently built status and Reis’ projections that the submarket will absorb
those units with a small decline in vacancy by the end of 2024.
Notes:
All figures are in U.S. dollars unless otherwise noted.
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Glossary
ADR
average daily rate
MTM
month to month
ALA
allocated loan amount
MSA
metropolitan statistical area
ARA
appraisal-reduction amount
n.a.
not available
ASER
appraisal subordinate entitlement reduction
n/a
not applicable
BOV
broker’s opinion of value
NCF
net cash flow
CAM
common area maintenance
NNN
triple net
capex
capital expenditures
NOI
net operating income
CBD
central business district
NRA
net rentable area
CBRE
CB Richard Ellis
NRI
net rental income
CMBS
commercial mortgage-backed securities
NR – PIF
not rated – paid in full
CRE
commercial real estate
OSAR
operating statement analysis report
CREFC
CRE Finance Council
PCA
property condition assessment
DPO
discounted payoff
PCR
property condition report
DSCR
debt service coverage ratio
P&I
principal and interest
DSR
debt service reserve
POD
probability of default
EGI
effective gross income
PIP
property improvement plan
EOD
event of default
PILOT
payment in lieu of taxes
F&B
food & beverage
PSA
pooling and servicing agreement
FF&E
furniture, fixtures, and equipment
psf
per square foot
FS Hotel
full-service hotel
R&M
repairs and maintenance
G&A
general and administrative
REIT
real estate investment trust
GLA
gross leasable area
REO
real estate owned
GPR
gross potential rent
RevPAR
revenue per available room
HVAC
heating, ventilation, and air conditioning
sf
square foot/square feet
IO
interest only
SPE
special-purpose entity
LC
leasing commission
TI
tenant improvement
LGD
loss severity given default
TIC
tenants in common
LOC
letter of credit
T-12
trailing 12 months
LOI
letter of intent
UW
underwriting
LS Hotel
limited-service hotel
WA
weighted average
LTC
loan-to-cost ratio
WAC
weighted-average coupon
LTCT
long-term credit tenant
x
times
LTV
loan-to-value ratio
YE
year end
MHC
manufactured housing community
YTD
year to date
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Definitions
Capital Expenditure (capex)
Costs incurred in the improvement of a property that will have a life of more than one year.
DBRS Morningstar Market Rank (DBRSM MR)
The Market Rank is a number of one through eight that corresponds to the underlying property’s zip code. For portfolio loans
with multiple underlying properties, the Market Rank applied reflects an approximation of the weighted-average figure based
on the corresponding model coefficients.
DBRS Morningstar MSA Group (DBRSM MSA)
The MSA Group is a number of one through three for the top 25 largest MSAs and is based on the MSA’s historical
performance. All MSAs outside of the top 25 reflect a MSA Group number of zero. For portfolio loans with multiple underlying
properties, the MSA Group applied reflects an approximation of the weighted-average figure based on the corresponding
model coefficients.
DBRS Morningstar Refi DSCR
A measure that divides the DBRS Morningstar Stabilized NCF by the product of the loan’s maturity balance and a stressed
refinance debt constant.
DBRS Morningstar Term DSCR
A measure that divides the DBRS Morningstar Stabilized NCF by the actual debt service payment.
Debt Service Coverage Ratio (DSCR)
A measure of a mortgaged property’s ability to cover monthly debt service payments, defined as the ratio of net operating
income or net cash flow to the debt service payments.
Effective Gross Income (EGI)
Rental revenue minus vacancies plus miscellaneous income.
Issuer UW
Issuer underwritten from Annex A or servicer reports.
Loan-to-Value Ratio (LTV)
The ratio between the principal amount of the mortgage balance, at origination or thereafter, and the most recent appraised
value of the underlying real estate collateral, generally from origination.
Net Cash Flow (NCF)
The revenue earned by a property’s ongoing operations less the expenses associated with such operations and the capital
costs of tenant improvements, leasing commissions, and capex (or reserves). Moreover, NCF is net operating income less
tenant improvements, leasing commissions, and capex.
NNN (Triple Net)
A lease that requires the tenant to pay operating expenses such as property taxes, insurance, and maintenance, in addition to
the rent.
Net Operating Income (NOI)
The revenue earned by a property’s ongoing operations less the expenses associated with such operations but before
mortgage payments, tenant improvements, replacement reserves, and leasing commissions.
Net Rentable Area (NRA)
The area (sf) for which rent can be charged. NRA includes the tenant’s premises plus an allocation of the common area directly
benefiting the tenant, such as common corridors and restrooms.
Revenue Per Available Room (RevPAR)
A measure that divides revenue by the number of available rooms, not the number of occupied rooms. It is a measure of how
well the hotel has been able to fill rooms in the off-season, when demand is low even if rates are also low, and how well it fills
the rooms and maximizes the rate in the high season, when there is high demand for hotel rooms.
Tenant Improvements (TIs)
The expense to physically improve the property or space, such as new improvements or remodeling, paid by the borrower.
Weighted Average (WA)
Calculation is weighted by the size of each mortgage in the pool.
Weighted-Average Coupon (WAC)
The average coupon or interest payment on a set of mortgages, weighted by the size of each mortgage in the pool.
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