KBRA Downgrades All Ratings for BSREP 2021-DC

KBRA downgrades all ratings for BSREP 2021-DC, a CMBS single-borrower transaction. The rating actions follow a surveillance review of the transaction and are driven by a deterioration of collateral performance and property value, which were caused by declines in property occupancy and net cash flow since securitization. KBRA also considered the loan’s impending final maturity date on August 9, 2026, and the significant refinance risk given current market conditions in the office sector. According to the servicer as of June 16, 2026, the borrower sponsor did not provide any indication whether it would be able to pay off the loan at maturity. KBRA’s analysis of property cash flow and the resulting debt yield and KLTV metrics indicate a weak maturity outlook. A maturity default could cause a transfer to special servicing, which may result in the accumulation of servicer advances while the special servicer evaluates potential workout and disposition strategies.

The transaction was originally secured by a $443.1 million first-lien mortgage loan collateralized by eight properties, including the borrower’s fee simple interests in seven office properties and the leasehold interest in one office property, all of which are located in the Washington, DC MSA. Since securitization, two properties—Fairgate @ Ballston ($35.4 million ALA, 8.4% of the original balance) and Courthouse Square ($22.1 million ALA, 5.0% of the original loan balance)—were sold and released from the trust. The property releases reduced the outstanding balance of the trust to $377.6 million. As of the July 2026 remittance period, the portfolio has 1.2 million sf of office space across six buildings. The sponsors of the borrowers are affiliates of Brookfield Asset Management.

The floating-rate interest-only loan had an initial term of two years with three one-year extension options. The borrower exercised each of its extension options and has no additional extensions remaining ahead of the fully extended maturity date of August 9, 2026. An interest rate cap agreement is in place but is scheduled to expire on August 15, 2026.

KBRA analyzed the cash flow for the properties utilizing information from the trustee and servicer to determine KNCF. The analysis produced a KNCF of $25.2 million and a KBRA value of $265.4 million ($220 per sf). The resulting in-trust KLTV is 142.2%, compared to 145.9% at last review and 112.2% at securitization. Due to the portfolio’s low occupancy and DSC, as well as weakening office sector demand, KBRA maintains the loan’s K-LOC designation and its KPO of Underperform.

Details concerning the classes with ratings changes are as follows:

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