Press Release|CMBS

KBRA Places All Ratings of BFLD 2020-EYP on Watch Downgrade

19 Mar 2024   |   New York


KBRA places the ratings of all classes of BFLD 2020-EYP, a CMBS SASB transaction, on Watch Downgrade. The Watch action is primarily driven by the loan’s status as a delinquent and specially serviced loan and the decrease in the collateral property’s cash flow and value. KBRA also considered the likelihood of interest shortfalls continuing to affect the classes during the resolution of the loan. As of March, the loan is 90+ days delinquent, with total outstanding advances of $15.7 million, including ASERs, and is categorized as matured non-performing.

The loan was transferred to special servicing in April 2023 for imminent monetary default prior to its October 2023 maturity date. The sponsor is Brookfield DTLA Holdings LLC (Brookfield DTLA), an affiliate of Brookfield Property Partners, L.P.

The transaction collateral consists of a non-recourse, first-lien mortgage loan secured by the borrower’s fee simple interest in Ernst & Young Plaza, a 41-story, 973,364-sf, Class-A, LEED Platinum-certified office tower in Downtown Los Angeles. The tower was built in 1985. The floating-rate loan has an outstanding principal balance of $275.0 million ($283 per sf) as of March 2024. The interest-only loan originally had a two-year term with three one-year extension options. The borrower used its first option and extended the maturity to October 2023 and purchased a substitute interest rate cap for the duration of the extended term with a strike rate of 6.02%. The loan was transferred to special servicing before it reached the October maturity date.

According to the January 2024 rent roll, Ernst & Young Plaza is about 71.2% leased, down from 76.4% at year-end 2022 and 78.4% at issuance. There is also meaningful tenant rollover exposure through year-end 2025, with leases contributing 35.4% of base rent expiring in 2024 (10.9%) and 2025 (25.4%). On the positive side, the servicer recently reported that two new leases were approved for roughly 33,300 sf combined, and that several other lease proposals were being worked on. If the newly approved leases are accounted for, the property is about 75.3% leased.

Ernst & Young Plaza was re-appraised in December 2023 for $210.7 million, down from $475.0 million at securitization. An ARA of $104.7 million is currently assigned to the loan.

The FY 2022 NCF reported by the servicer decreased 15.4% to $18.2 million from $21.5 million underwritten by the issuer at closing. The decline is due in part to free rent periods attributable to Pillsbury Winthrop (4th largest, 5.2%) and Clune Construction (1.7%). The tenants’ free rent periods ended in June 2022 and April 2022, respectively. Based on the reported FY 2022 NCF, the DSC at the current rate (SOFR plus loan spread) is roughly 0.80x

KBRA maintains the loan’s K-LOC designation and KPO of Underperform based on its delinquency, special servicing status, and weak fundamentals in the Downtown Los Angeles office market.

KBRA will continue to monitor the transaction and loan performance and will seek to resolve or update the Watch Downgrade status within 90 days.

To access rating and relevant documents, click here.

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A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at

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Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

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