KBRA Affirms One Rating for M360 2021-CRE3
18 Sep 2026 | New York
KBRA affirms the remaining outstanding rating for M360 2021-CRE3, an $88.2 million CRE CLO transaction which had the ability to reinvest principal proceeds for 24 months. The affirmations reflect stability in KBRA's estimated losses for the remaining four loans since the last ratings change in September 2024. Of the remaining loans, three ($34.9 million, 84.7% of the current pool balance) are specially serviced and categorized as non-performing matured balloon. All three specially serviced loans have been identified as K-LOCs. However, the transaction has benefited from increased note subordination as the trust has paid down by $331.8 million (79.0% of the issuance balance). At securitization, the trust had a balance of $420.0 million and was comprised of 42 loans secured by 43 properties, as well as $10.2 million of cash collateral.
The securitization includes an overcollateralization cash diversion test and an interest coverage test, both of which have been satisfied for the last eleven distribution dates. In January 2024, the Class G notes, the remaining outstanding rated certificate, began accumulating interest deferrals as a result of insufficient cash flow generated by the pool, primarily due to specially serviced loans deferring monthly interest payments. However, all previously deferred PIKable interest was repaid as of the August 2026 distribution date. Given the significant concentration of specially serviced loans, Class G is likely to accumulate additional interest deferrals in future distribution periods. Currently, the trust balance is undercollateralized by $47.1 million.
Details of the remaining loans are outlined below:
Floriland Office ($14.3 million, 34.7%, K-LOC, Specially Serviced, Non-Performing Matured Balloon)
- The loan is collateralized by a 161,060 sf, Class-B office building located in Tampa, Florida. The property was built in 1972 and renovated in 1992.
- The loan transferred to the special servicer in January 2026 due to maturity default. The special servicer denied the borrower’s request for a 90-day extension to facilitate the sale of the property. The lockbox has been activated, with available funds being utilized to keep monthly debt service payments current. A purchase and sale agreement (PSA) was executed for $13.5 million and the sale has closed. The resulting loan payoff is expected to be reflected in a future distribution statement.
- An appraisal dated January 2026 indicated an as-is value of $13.6 million ($84 per sf), down from $26.5 million ($165 per sf) at securitization. KBRA’s analysis resulted in an estimated loss of $2.8 million (19.5% estimated loss severity) on the $14.3 million funded loan balance, all of which is allocated to this trust. KBRA excluded $300,000 of unfunded future funding from its analysis due to the delinquent status of the loan. The estimated loss is based on a KBRA liquidation value of $11.3 million ($70 per sf), which was derived from the contracted sale price, with additional consideration given to special servicing fees and other liquidation-related expenses.
Signalmen Apartments ($12.6 million, 30.6%, K-LOC, Specially Serviced, Non-Performing Matured Balloon)
- The loan is collateralized by a 52-unit, Class-A, low-rise multifamily property located in Denver, Colorado. The property was built in 2022 and contributed to the trust as a reinvestment asset in June 2023.
- The loan transferred to the special servicer in October 2025 due to maturity default. The collateral manager indicated that, following the marketing of the asset, a PSA has been executed with a prospective buyer; however, the terms of the agreement were not provided. Concurrently, nonjudicial foreclosure proceedings have been initiated as an alternative resolution strategy in the event the contemplated sale does not close.
- An appraisal dated September 2025 indicated an as-is value of $13.9 million ($267,308 per unit), down from $16.0 million ($307,692 per unit) at contribution. KBRA’s analysis resulted in an estimated loss of $4.1 million (33.3% estimated loss severity) on the $12.6 million funded loan balance, all of which is allocated to this trust. KBRA excluded $75,000 of unfunded future funding from its analysis due to the delinquent status of the loan. The estimated loss is based on a KBRA liquidation value of $8.4 million ($161,236 per unit), which was derived using an income capitalization approach based on KNCF of $649,780 and a KBRA capitalization rate of 7.75%.
The Fives at Erieview ($8.0 million, 19.5%, K-LOC, Specially Serviced, Non-Performing Matured Balloon)
- The loan is collateralized by a 278,772 sf, Class-C office building located in Cleveland, Ohio. The property was built in 1968 and renovated in 2017.
- The loan transferred to the special servicer in November 2024 due to maturity default. Following court approval, the property is currently being marketed for sale through an online auction scheduled to conclude on October 7, 2026. The starting bid is $1.8 million.
- An appraisal dated April 2026 indicated an as-is value of $4.5 million ($16 per sf), down from $10.3 million ($37 per sf) at securitization. KBRA’s analysis resulted in an estimated loss of $5.7 million (64.7% estimated loss severity) on the $8.8 million funded loan balance, of which $5.2 million is allocated to this trust. KBRA excluded $1.6 million of unfunded future funding from its analysis due to the delinquent status of the loan. The estimated loss is based on a KBRA liquidation value of $3.1 million ($11 per sf), which was derived from the April 2026 appraisal and the upcoming starting bid.
Penn Station Apartments ($6.3 million, 15.3%, Current)
- The loan is collateralized by a 40-unit, garden-style multifamily property located in Meridian, Idaho. The property was built in 2001 and was contributed to the trust as a reinvestment asset in May 2022.
- The sponsor’s business plan included $490,000 of capital improvements intended to better position the property relative to its competitive set. The loan was also structured with a $250,000 earn-out, which was available upon achievement of a 7.0% debt yield. The collateral manager did not provide an update regarding the status of the capital improvement plan or the release of the earn-out. As of the April 2026 rent roll, the property was 92.5% occupied with average in-place rents of $1,450 per unit, compared to 100% and $1,070 per unit, respectively, at contribution. The full-year 2025 servicer reported debt yield was 7.86%.
Details concerning the rating affirmation are as follows:
- Class G at CCC (sf)
Rating Sensitivities
Future rating actions will be dependent upon the ongoing assessment of the timing and likelihood of ultimate payment of principal and deferred interest on the rated notes. The assessment will consider the expected and actual losses on the remaining assets in the transaction, as well as, the magnitude and extent of interest deferrals, if any, on the notes.
To access ratings and relevant documents, click here.