KBRA Places the Ratings of All Classes of JPMCC 2021-BOLT on Watch Downgrade

KBRA places all ratings of JPMCC 2021-BOLT, a CMBS SASB transaction, on Watch Downgrade. The Watch action is primarily driven by the recent modification of the loan, which resulted in a maturity date extension from August 2024 to August 2025, as well as a reduction in the payable interest rate to 2.50% through the extended loan period with deferred interest due at the extended maturity date. Due to the adjustment to the payable interest rate, interest shortfalls are affecting all rated certificates. The classes 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 $14.9 million of November 2024.

The servicer recently reported an updated as-is appraised value of $176.0 million ($47 per sf) as of July 2024, resulting in an LTV of 132.1%. The previous appraised value was $183.4 million ($49 per sf) in July 2023. Based on the new appraised value there is a heightened risk that the special servicer could render a non-recoverability determination should the loan become delinquent, thereby shutting off interest advances to all of the rated certificates.

The trust loan is with the special servicer as of the November 2024 remittance period; however, the loan is pending a return to the master servicer as a corrected mortgage loan following its recent modification. The loan initially transferred to the special servicer in June 2024 at the borrower’s request, as it indicated it would be unable to repay the loan by its August 2024 maturity date. In September 2024, the borrower and lender agreed to modification terms resulting in an extension of the maturity date to August 2025, and a reduction in the payable interest rate to 2.50% for the extended period. Additionally, the borrower funded $4.0 million of new equity at the modification closing to a lender-held operating expense shortfall reserve account.

The transaction collateral is a non-recourse, first lien mortgage loan secured by the borrower’s fee simple interest in Aspiria, formerly known as the Sprint Corporate Headquarters; a 20-building suburban office park containing 3,721,308 sf and situated on 190.4 acres in Overland Park, Kansas. The floating rate loan has a balance of $232.5 million ($62 per sf) as of May 2023. The loan was structured with an initial term of two years with no extension options and requires monthly interest-only payments based on one-month SOFR plus an initial spread of 4.15%. The borrower entered into an interest rate cap agreement with CIBC Bank USA for the initial term of the loan with a strike rate of 3.50%.

At KBRA’s August 2024 review, the property was 67.1% leased to over 50 tenants, compared to 62.9% at last review and 74.8% at issuance. The decrease in occupancy from closing is attributable to the downsizing of the tenant T-Mobile. The tenant currently occupies approximately 1.0 million sf (27.2% of collateral sf) on a long-term lease. The leases for 20 tenants representing 23.3% of total base rent are scheduled to expire though YE 2025. The largest expiring tenants are YRC, Inc. and Black & Veatch Corporation, which represent 5.2% and 5.0% of total base rent under leases that expire in August 2024 and January 2025, respectively. No other tenant expiring during the loan term represents more than 2.0% of total base rent.

KBRA will continue to monitor the transaction and loan performance, effectuating additional watch placements as necessary, and will seek to resolve or update the Watch Downgrade status within 90 days.

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