KBRA Affirms All Ratings for STWD 2021-FL2
1 May 2025 | New York
KBRA affirms all of its outstanding ratings for STWD 2021-FL2, a CRE CLO transaction with the ability to reinvest principal proceeds for 30 months. The affirmations follow a surveillance review of the transaction, which has exhibited a worsening in collateral performance since securitization including the addition of K-LOCs with losses. However, this is offset by transaction deleveraging.
At the time of this review, the total collateral balance is $992.4 million, which is comprised of 21 first mortgage loans secured by 39 properties. During the reinvestment period, the issuer was permitted to acquire previously unidentified whole loans and senior participations, provided the assets meet certain specified eligibility criteria. Following the first 24 months of the reinvestment period, the transaction provided a replenishment period of up to six months or until 10.0% ($127.5 million) of the securitization cut off balance was reinvested. The initial 24-month reinvestment period ended in May 2023, as expected, while the replenishment period ended in November 2023, as expected.
As of the April 2025 remittance period, there are no specially serviced loans; however, KBRA identified eight K-LOCs (48.6% of the current balance). The K-LOCs include five of the top 10 loans:
- Hope & Flower (largest, 11.4%)
- Mansell Overlook (2nd largest, 9.1% of pool balance, 17.2% estimated loss severity)
- Anthem Row (6th largest, 6.6%,19.9%)
- Margaritaville Orlando (8th largest, 5.4%)
- Lakeshore Towers (9th largest, 5.2%)
One other K-LOC has an estimated loss:
- Towers at West End II (4.0%, 28.6%)
The remaining two K-LOCs represent 7.0% of the pool balance.
The transaction’s WA KLTV is 140.7%, compared to 129.4% at last review and 125.0% at securitization. The KDSC at Index Cap is 1.30x, compared to 1.34x at last review and 1.11x at securitization. The overcollateralization and interest coverage tests have each been satisfied during each distribution date since issuance.
At securitization, 19 loans (84.4% of the issuance balance) had related companion participations representing unfunded future advance obligations, with an aggregate unfunded amount of $223.5 million. Currently, there are 11 loans (47.9% of the current balance), with unfunded future advance obligations with an aggregate of $76.8 million unfunded.
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