KBRA Places All Outstanding Ratings of PKHL Commercial Mortgage Trust 2021-MF on Watch Downgrade

KBRA places all outstanding ratings of PKHL Commercial Mortgage Trust 2021-MF, a CMBS SASB transaction, on Watch Downgrade (DN). The Watch Downgrade placement follows the reporting of interest shortfalls during the September 2025 remittance period. The interest shortfalls occurred after the servicer determined the trust collateral to be non-recoverable this month, resulting in all rated classes of certificates not receiving monthly interest distributions for September. The classes whose ratings are placed on Watch Downgrade are susceptible to further interest shortfalls from special servicing fees and other trust expenses and have a heightened risk of potential principal losses while the special servicer works to resolve the loan. Cumulative interest shortfalls total $1.6 million, equal to September’s scheduled interest payment plus one month’s unpaid trust expenses, while cumulative outstanding servicer advances for the loan total $28.7 million this month.

The transaction collateral is a non-recourse, first lien mortgage loan with a principal balance of $225.0 million. The floating-rate loan was structured with an initial two-year term through July 9, 2023 with three one-year extension options and requires monthly interest-only payments based on term SOFR plus 0.11448% plus a spread of 3.97%. The loan was transferred to the special servicer in February 2023 for payment default. The borrower subsequently failed to pay off the loan or exercise its extension option at the July 2023 maturity date. The special servicer’s workout strategy is foreclosure, which was initiated in May 2024. According to servicer commentary, a receiver for the collateral property was installed in July 2025. The loan is paid through May 2024.

The loan is secured by the borrower’s fee simple interest in two adjacent, Class-A multifamily towers with a total of 538 units located in the Jamaica neighborhood of Queens, one of five New York City boroughs. The 16-story 89th Avenue building contains 481 units (89.4% of total unit count), and the eight-story 88th Avenue building contains 57 units (10.6%). According to servicer commentary, the collateral was 93.4% leased as of July 2025. The most recent rent rolls available were from December 2023 and indicated the collateral was 92.2% leased, compared to 79.6% at issuance. Operating history for the properties has not been available since YE 2023.

If KBRA determines that the interest shortfalls will likely continue until the special servicer works through the resolution of the asset and that such workout timing could be protracted, downgrades are likely. KBRA will seek to resolve or update the Watch Downgrade status within 90 days.

Details concerning the classes with ratings placed on Watch Downgrade are as follows:

To access ratings and relevant documents, click here.

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