KBRA Downgrades All Outstanding Ratings and Removes All Ratings from Watch Downgrade for PKHL Commercial Mortgage Trust 2021-MF

KBRA downgrades all outstanding ratings for PKHL Commercial Mortgage Trust 2021-MF, a CMBS SASB transaction. Simultaneously, KBRA removes the ratings of all outstanding classes of certificates from Watch Downgrade (DN), where they were placed on September 19, 2025. The rating actions follow a surveillance review of the transaction and are primarily driven by the loan’s foreclosure status, the servicer’s non-recoverability determination for the trust collateral and resulting interest shortfalls, and the increase in outstanding servicer advances since the loan transferred to the special servicer in February 2023. The servicer determined the mortgage loan to be non-recoverable in September, and interest shortfalls of $4.7 million are affecting outstanding principal and interest classes A through HRR and interest-only class X-NCP. Prior to the non-recoverable determination, there was no appraisal reduction amount effectuated for the mortgage loan. The likelihood of a protracted workout period while the special servicer works to resolve the loan portends ongoing interest shortfalls through upcoming reporting periods. Additionally, the collateral property’s performance has deteriorated due to higher operating expenses and minimal growth in rental rates since securitization. This resulted in a reduction in KBRA value compared to KBRA’s last ratings change in September 2024 and securitization. KBRA considered the potential for principal and interest recoveries at the top of the capital structure upon a capital event, workout, or resolution and will continue to monitor the transaction collateral as it continues through receivership and moves through the foreclosure process.

The transaction collateral is a non-recourse, first lien mortgage loan with a principal balance of $225.0 million ($418,216 per unit). 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 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 initiated foreclosure in May 2024 and a receiver for the collateral property was installed in July 2025. The loan is paid through May 2024 and total outstanding servicer advances as of November 2025 totaled $27.8 million, comprising $23.2 million in interest advances, $2.3 million in other advances, and $2.3 million in cumulative interest on advances. Cumulative non-recoverable interest totaled $4.8 million.

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, New York. 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 the October 2025 rent roll, the collateral was 89.8% leased, compared to 92.2% as of December 2023 and 79.6% at issuance.

KBRA analyzed the cash flow for the property utilizing information from the trustee and servicer to determine KNCF. The analysis produced a KNCF of $8.3 million and a KBRA value of $111.2 million ($206,613 per unit). The resulting in-trust KLTV increased to 202.4% from 157.3% at KBRA’s last ratings change in September 2024 and from 126.1% at securitization. KBRA maintains the loan’s K-LOC designation and KPO of Underperform.

Details concerning the classes with rating changes are as follows:

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