DBRS Morningstar Examines Trends in the Application of Its North American Single-Asset/Single-Borrower Methodology
DBRS Morningstar published a commentary reviewing recent data and trends in DBRS Morningstar’s single-asset/single-borrower (SASB) transactions following the adoption of DBRS Morningstar’s “North American Single-Asset/Single-Borrower Ratings Methodology” in March 2020. More specifically, we analyzed single-asset commercial real estate (CRE) transactions or loans or single-borrower transactions with multiple CRE assets. DBRS Morningstar reviewed a total of 164 public deals from 2011 to H1 2021, and findings include the following:-- Offices were the most common type of property with 45.1% of the transactions (74 deals) followed by full-service hotels and limited-service hotels.
-- The average fully extended loan term for transactions has been decreasing, to less than seven years in 2021 from 10 years in 2011.
-- Net cash flow haircuts ranged from 27.9% for unanchored retail to 2.75% for Tier 1 regional malls.
-- DBRS Morningstar capitalization rates were typically 1.5% to 3.0% higher than the issuer capitalization rates.
DBRS Morningstar is a global credit ratings business with 700 employees in eight offices globally. DBRS and Morningstar Credit Ratings are committed to empowering investor success, serving the market through leading-edge technology and raising the bar for the industry.
Together, we are the world’s fourth largest credit ratings agency and a market leader in Canada, the U.S. and Europe in multiple asset classes. We rate more than 2,600 issuers and 54,000 securities worldwide and are driven to bring more clarity, diversity and responsiveness to the ratings process. Our approach and size provide the agility to respond to customers’ needs, while being large enough to provide the necessary expertise and resources. For more details visit us at dbrs.com.
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