KBRA Downgrades Four Ratings and Affirms All Other Ratings for BFLD 2020-EYP

KBRA downgrades the ratings for four classes and affirms all of the other outstanding ratings for BFLD 2020-EYP, a CMBS SASB transaction. The downgrades are primarily driven by the potential near-term sale of the note, which signals a heightened risk for substantial principal losses to the trust. According to the May 2025 servicer reporting, the estimated closing date is mid-June 2025. In taking this action, KBRA considered the sale proceeds against the loan's current total exposure of $316.7 million, which consists of the $275.0 million trust loan, cumulative interest shortfalls of $18.1 million, outstanding P&I advances of $20.6 million, and $3.0 million of other advances. KBRA also considered the $170.0 million ARA and corresponding $18.0 million ASER.

KBRA previously downgraded the ratings for seven classes in March 2025, primarily as result of deterioration in collateral performance and property value caused by declines in property occupancy and net cash flow. At the time, KBRA also considered the loan's specially serviced status, outstanding advances, the ARA, and an August 2024 property valuation of $150.0 million ($160 per sf). Weak office fundamentals in the Downtown Los Angeles submarket and the poor outlook for a rebound in office demand in the near term were other factors that we considered.

The transaction collateral is a $275.0 million ($283 per sf) non-recourse, first-lien mortgage loan. The floating-rate loan requires monthly interest-only payments based on one-month term SOFR plus a spread of 2.857%. The loan sponsor, Brookfield DTLA Holdings LLC (Brookfield DTLA), an affiliate of Brookfield Property Partners, L.P. (Brookfield), notified the servicer in early April 2023 that it would cease paying debt service on the loan. The loan transferred to special servicing that same month and a receiver was appointed in May 2023. The borrower also did not repay or extend the loan when it matured in October 2023.

The loan is secured by the borrower’s fee simple interest in Ernst & Young Plaza, a 41-story, 953,878-sf Class-A, LEED Platinum-certified office tower in the Downtown submarket of Los Angeles. According to CBRE, the Downtown LA CBD submarket had an office inventory of 32.4 million sf as of Q1 2025. For the same period, the submarket direct vacancy rate was 33.6% and the overall availability rate was 37.2%. A year ago, these rates were 26.2% and 33.9%, respectively. Net absorption in 2024 was negative 1.47 million sf.

According to the December 2024 rent roll, the building was 68.6% leased, down from 71.5% at last review and 78.4% at issuance. Leases that generate 31.2% of total base rent will expire this year (25.4%) and next (5.8%). The servicer-reported DSCs are: 0.78x (FY 2024), 0.85x (FY 2023), 1.27x (FY 2022), 2.14x (FY 2021); at issuance, the underwritten DSC was 2.52x. KBRA maintains the loan’s K-LOC designation and KPO of Underperform.

Rating Sensitivities

Future rating actions will be dependent upon the ongoing assessment of the timing and likelihood of ultimate payment of principal and accrued interest on the rated certificates which will be dependent on the value of the asset and the disposition of the loan. The assessment will consider the expected and actual losses, as well as the magnitude and extent of accrued interest shortfalls on the certificates.

Details for the classes with rating changes are as follows:

To access ratings and relevant documents, click here.

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