Exantas Capital Corp. 2020-RSO8, Ltd - DBRS Morningstar
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PRESALE REPORT Exantas Capital Corp. 2020-RSO8, Ltd. FEBRUARY 2020 STRUCTURED FINANCE: CMBS
Table of Contents Capital Structure 3 Transaction Summary 4 Rating Considerations 5 DBRS Morningstar Credit Characteristics 7 Largest Loan Summary 8 DBRS Morningstar Sample 9 Model Adjustments 11 Transaction Concentrations 12 Loan Structural Features 13 Forest Cove Apartments 17 Tribeca North Luxury Apartments 21 Waterside Greene 24 The Monroe 28 Legacy Bank Plaza 32 Rivington House 36 Pineforest Park & Place Apartments 39 Villas de la Cascada 42 209 W Jackson 45 1800 Ashley West 48 Transaction Structural Features 51 Methodologies 52 Surveillance 52 Glossary 54 Definitions 54 Kyle Stein Greg Haddad Vice President Senior Vice President +1 917 438-1450 +1 646 560-4590 kyle.stein@dbrsmorningstar.com greg.haddad@dbrsmorningstar.com Kevin Mammoser Erin Stafford Managing Director Managing Director +1 312 332-0136 +1 312 332-3291 kevin.mammoser@dbrsmorningstar.com erin.stafford@dbrsmorningstar.com
Presale Report | XAN 2020-RSO8
Capital Structure
Description Rating Action Balance Subordination DBRS Morningstar Trend
Rating
Class A New Rating - Provisional $295,286,000 43.500% AAA (sf) Stable
Class A-S New Rating - Provisional $39,198,000 36.000% AAA (sf) Stable
Class B New Rating - Provisional $26,131,000 31.000% AA (low) (sf) Stable
Class C New Rating - Provisional $32,665,000 24.750% A (low) (sf) Stable
Class D New Rating - Provisional $26,131,000 19.750% BBB (high) (sf) Stable
Class E New Rating - Provisional $16,332,000 16.625% BBB (low) (sf) Stable
Class F New Rating - Provisional $28,745,000 11.125% BB (low) (sf) Stable
Class G New Rating - Provisional $20,905,000 7.125% B (low) (sf) Stable
Preferred Shares New Rating - Provisional $37,238,290 --- NR Stable
Notes:
1. NR = not rated.
2. The Class F Notes, the Class G Notes, and the Preferred Shares are not offered hereby.
3. The Class F Notes, the Class G Notes, and the Preferred Shares will be issued by the Issuer only and will not be co-issued by the Co-Issuer.
4. The Preferred Shares will not be rated.
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Transaction Summary
P OOL CHARACTE RI S TI CS
Trust Amount ($) 522,631,290.2 Participated Loan Commitment Amount ($) 559,556,702.0
Number of Loans 32 Average Loan Size ($) 17,486,146.9
Number of Properties 35 Top Ten Loan Concentration (%) 54.9
Managed / Static Static Unfunded Companion Participation Amount ($) 36,925,411.8
Preidentified Ramp Loans N Replenishment Allowed Y
Class (XX) OC Trigger (%) 113.94 Reinvestment Period7 0 months
Initial Class (XX) OC Test (%) 119.94 IC Ratio: Trigger (X) N/A
Wtd. Avg. Current Funded As-Is 74.0 Wtd. Avg. DBRS Morningstar As-Is Issuance 79.2
Issuance LTV (%) LTV6 (%)
Wtd. Avg. Current Funded Stabilized 67.8 Wtd. Avg. DBRS Morningstar Stabilized 66.3
LTV (%) Balloon LTV4 (%)
Wtd. Avg. Interest Rate Margin (%) 3.00 DBRS Morningstar Wtd. Avg. Interest Rate4 5.13
(%)
Wtd. Avg. Remaining Term1 31.4 Wtd. Avg. Remaining Term - Fully Extended 54.5
Wtd. Avg. DBRS Morningstar As-Is Term 0.81 Wtd. Avg. Issuer As-Is Term DSCR (X) 1.29
DSCR2,4,6
Wtd. Avg. DBRS Morningstar Stabilized 1.02 Wtd. Avg. Issuer Stabilized DSCR (X) 1.61
DSCR2,3
Avg. DBRS Morningstar As-Is NCF -11.2 Avg. DBRS Morningstar Stabilized NCF -18.9
Variance2 (%) Variance3 (%)
Note: All DSCR calculations in this table and throughout the report are based on the trust mortgage loan commitment for each loan and exclude DBRS Morningstar Ramp
loan assumptions if applicable. All Stabilized Balloon calculations are calculated assuming the loan is fully extended and with the DBRS Morningstar Stressed Interest Rate.
1. Assumes that the initial term to maturity of each loan is not extended.
2. Based on DBRS Morningstar As-Is NCF.
3. Based on DBRS Morningstar Stabilized NCF.
4. Based on the DBRS Morningstar Stressed Interest Rate.
5. Interest rate assumes 2.18% one-month LIBOR stress based on the LIBOR strike rate of the interest rate cap, which is lower than the stressed rate from the DBRS
Morningstar Interest Rate Stresses for U.S. Structured Finance Transactions methodology. All DBRS Morningstar Term DSCR figures are based on this stressed rate
6. Assumes unfinded facilities are fully funded.
7. Means the period beginning on the date of the deposit of Permitted Principal Proceeds and ending 120 days thereafter.
PA RTICIPANTS
Issuer Exantas Capital Corp. 2020-RSO8, Ltd.
Co-Issuer Exantas Capital Corp. 2020-RSO8, LLC
Mortgage Loan Seller RCC Real Estate, Inc.
Servicer C-III Asset Management, LLC
Special Servicer Resource Real Estate, LLC
Custodian/Note Administrator Wells Fargo Bank, National Association
Trustee Wilmington Trust, National Association
Placement Agent J.P. Morgan Securities LLC, Barclays Capital Inc., Wells Fargo Securities, LLC
Structuring Agent J.P. Morgan Securities LLC
Advancing Agent RCC Real Estate, Inc.
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Rating Considerations
The initial collateral consists of 32 floating-rate mortgage loans secured by 35 transitional properties totaling $522.6 mil-
lion (93% of the total fully funded balance), excluding $36.9 million of remaining future funding commitments. The asset
classes in the pool are office properties (15.0%), multifamily properties (76.6%), manufactured housing properties (3.1%),
self-storage (2.6%), and a limited-service hotel (2.7%). The loans are mostly secured by cash flowing assets, most of which
are in a period of transition with plans to stabilize and improve the asset value. Of these loans, 28 have remaining future
funding participations totaling $36.9 million, which the Issuer may acquire in the future. Please see the chart below for
participations that the Issuer will be allowed to acquire.
Given the floating-rate nature of the loans, the index DBRS Morningstar used (one-month Libor) was the lower of DBRS
Morningstar’s stressed rate that corresponded to the remaining fully extended term of the loans and the strike price of
the interest-rate cap with the respective contractual loan spread added to determine a stressed interest rate over the loan
term. When measuring the cutoff date balances against the DBRS Morningstar As-Is NCF, 25 loans, representing 78.2% of
the mortgage loan cutoff date balance, had a DBRS Morningstar As-Is DSCR below 1.00x, a threshold indicative of default
risk. Additionally, the DBRS Morningstar Stabilized DSCR for 15 loans, comprising 50.5% of the initial pool balance, is
below 1.00x, which indicates elevated refinance risk. The properties are often transitioning with potential upside in cash
flow; however, DBRS Morningstar does not give full credit to the stabilization if there are no holdbacks or if the other
loan structural features are insufficient to support such treatment. Furthermore, even if the structure is acceptable, DBRS
Morningstar generally does not assume the assets will stabilize above market levels. The transaction will have a sequential-
pay structure.
STRENGTHS
– The loans were all sourced by an affiliate of the Issuer, which has strong origination practices and substantial experience
in multifamily, office, hospitality, and self-storage properties.
– Twenty-six loans, comprising 75.9% of the initial trust balance, represent acquisition financing wherein sponsors contributed
material cash equity as a source of funding in conjunction with the mortgage loan. Cash equity infusions from a sponsor
in a transaction typically result in the lender and borrower having a greater alignment of interests, especially compared
with a refinancing scenario where the sponsor may be withdrawing equity from the transaction.
– The pool benefits from relatively strong diversity for a commercial real estate collateralized loan obligation, with a
Herfindahl score of 22.3. Texas, Georgia, Florida, South Carolina, Nevada, and California have the largest percentages of
property concentrations, with 18.3%, 16.6%, 11.1%, 10.8%, 7.8%, and 7.7%, respectively.
– The pool benefits from a high multifamily concentration, as 24 loans representing 76.6% of the pool are secured by multifamily
properties. Historically, multifamily properties have defaulted at much lower rates than the overall CMBS universe.
CHALLENGES AND CONSIDERATIONS
– DBRS Morningstar has analyzed the loans to a stabilized cash flow for the loans that is, in some instances, above the in-place
cash flow. It is possible that the sponsors will not successfully execute their business plans and that the higher stabilized
cash flow will not materialize during the loan term. A sponsor’s failure to execute the business plan could result in a term
default or the inability to refinance the fully funded loan balance.
– DBRS Morningstar made relatively conservative stabilization assumptions and, in each instance, considered the business
plan to be rational and the future funding amounts to be sufficient to execute such plans. In addition, DBRS Morningstar
analyzes LGD based on the As-Is LTV, assuming the loan is fully funded.
– Only two loans (8.1% of the pool) are secured by properties in markets with a DBRS Morningstar Market Rank of 7 or 8
(209 West Jackson and Rivington House), which are considered dense urban in nature and benefit from increased liquidity
with consistently strong investor demand, even during times of economic stress. Furthermore, 22 loans, representing 76.0%
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of the initial trust balance, are secured by properties in markets with a DBRS Morningstar Market Rank of 3 or 4, which,
although generally suburban in nature, have historically had higher PODs. The pool’s WA DBRS Morningstar Market Rank
of 3.67 indicates a high concentration of properties in less densely populated suburban areas.
– Properties in less densely populated markets were analyzed with higher PODs than those in more urban markets.
– All loans have floating interest rates and are IO during the initial loan term, which ranges from 36 months to 48 months,
creating interest-rate risk.
– The borrowers of 31 of the 32 loans have purchased Libor rate caps for mortgage rate caps ranging between 5.4% to 7.7% to
protect against rising interest rates over the term of the loan. Sanctuary Lofts (0.65% of the pool) is required to purchase
an interest rate cap in the event its DSCR drops below 1.30x.
– All loans are short term and, even with extension options, have a fully extended loan term of five years maximum.
– Additionally, all loans have extension options except for Greenville Portfolio (1.57%) and Sanctuary Lofts (0.65%); to
qualify for these options, the loans must meet minimum DSCR and LTV requirements.
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DBRS Morningstar Credit Characteristics
D BRS MO RNINGS TAR AS -I S D S CR ( X ) D B R S MO R N IN G STA R STA B IL L IZED D SC R ( X)
% of the Pool % of the Pool
DSCR (Senior Note Balance1) DSCR (Senior Note Balance1)
0.00x-0.50x 6.8 0.00x-0.50x 0.0
0.50x-0.75x 29.1 0.50x-0.75x 0.0
0.75x-1.00x 42.3 0.75x-1.00x 0.5
1.00x-1.25x 21.2 1.00x-1.25x 40.8
1.25x-1.50x 0.0 1.25x-1.50x 4.1
1.50x-1.75x 0.7 1.50x-1.75x 4.6
>1.75x 0.0 >1.75x 0.0
Wtd. Avg. (x) 0.81 Wtd. Avg. (x) 1.02
D BRS MO RNINGS TAR AS -I S I S S U AN CE LTV D B R S MO R N IN G STA R EX IT D EB T Y IEL D
% of the Pool % of the Pool
LTV (Senior Note Balance1) LTV (Senior Note Balance1)
0.0%-50.0% 0.0 0.0%-50.0% 0.0
50.0%-60.0% 2.8 50.0%-60.0% 6.1
60.0%-70.0% 14.1 60.0%-70.0% 66.3
70.0%-80.0% 29.9 70.0%-80.0% 27.6
80.0%-90.0% 49.8 80.0%-90.0% 0.0
90.0%-100.0% 2.4 90.0%-100.0% 0.0
100.0%-110.0% 0.0 100.0%-110.0% 0.0
110.0%-125.0% 0.0 110.0%-125.0% 0.0
>125.0% 0.0 >125.0% 0.0
Wtd. Avg. (%) 79.2 Wtd. Avg. (%) 66.3
1. Includes pari passu debt, but excludes subordinate debt.
2. The senior note balloon balance assumes the DBRS Morningstar Stressed Interest Rate and the fully-extended loan term.
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Largest Loan Summary
LOAN DETAIL
DBRS DBRS DBRS Fully Funded Fully Funded
Morningstar Morningstar Morningstar DBRS DBRS
Trust % of Shadow As-Is DSCR Stabilized Morningstar Morningstar LTV
Loan Name Balance ($) Pool Rating (x) DSCR (x) LTV (As-Is) (%) (Stabilized)1 (%)
Forest Cove Apartments 51,668,687 9.9 n/a 0.88 0.95 83.7 69.7
Tribeca North Luxury Apartments 41,000,000 7.8 n/a 1.15 1.15 67.1 62.7
Waterside Greene 38,693,268 7.4 n/a 0.61 1.03 89.4 70.7
The Monroe 28,437,735 5.4 n/a 0.81 1.01 83.1 71.0
Legacy Bank Plaza 25,350,000 4.9 n/a 0.84 0.83 71.8 66.9
Rivington House 21,350,000 4.1 n/a 1.12 1.30 66.8 64.0
Pineforest Place & Park Apart- 21,115,000 4.0 n/a 0.87 0.97 86.5 70.7
ments
Villas de la Cascada 21,000,000 4.0 n/a 0.89 0.93 80.3 66.6
209 West Jackson 20,700,000 4.0 n/a 0.72 0.72 75.5 62.2
1800 Ashley West 17,819,489 3.4 n/a 0.61 0.91 87.8 67.2
1. The senior note balloon balance assumes the DBRS Morningstar Stressed Interest Rate and the amortization schedule over the fully-extended loan term.
P R OPERTY DETAI L
Fully Funded
DBRS Fully Funded Mortgage
Morningstar Mortgage Loan Maturity Balance
Loan Name Property Type City State Year Built SF/Units per SF/Units ($) per SF/Units ($)
Forest Cove Apartments Multifamily Atlanta GA 1985 646 82,260 646
Tribeca North Luxury Apartments Multifamily North Las Vegas NV 2009 312 131,410 312
Waterside Greene Multifamily Greenville SC 2006 378 112,087 378
The Monroe Multifamily Tallahassee FL 1999 288 102,431 288
Legacy Bank Plaza Office Plano TX 1999 155,985 167 155,985
Rivington House Multifamily New York NY 1914 51 441,176 51
Pineforest Place & Park Apart- Multifamily Houston TX 1973 343 66,327 343
ments
Villas de la Cascada Multifamily San Antonio TX 1984 268 80,597 268
209 West Jackson Office Chicago IL 1896 142,873 175 142,873
1800 Ashley West Multifamily Charleston SC 1978 207 95,411 207
Note: Loan metrics are based on whole-loan balances.
February 2020 8
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DBRS Morningstar Sample
D BRS MO RNINGS TAR S AM PLE RE S U LTS
DBRS
DBRS DBRS Morningstar
Prospectus Morningstar Morningstar DBRS Morningstar Property
ID Loan Name % of Pool NCF NCF Variance Major Variance Drivers Quality
1 Forest Cove Apartments 9.9 3,407,976 -23.83 GPR, Vacancy Average
2 Tribeca North Luxury Apartments 7.8 2,856,195 -10.34 In place analysis Average +
3 Waterside Greene 7.4 2,871,865 -12.86 GPR, Expenses Average
4 The Monroe 5.4 2,118,125 -10.04 GPR, Expenses, Vacancy Average
5 Legacy Bank Plaza 4.9 1,472,039 -32.44 Vacancy, GPR Average
6 Rivington House 4.1 1,793,773 -8.25 GPR, Residential Vacancy Average +
7 Pineforest Place & Park 4.0 1,413,471 -21.66 GPR, Repairs and Average -
Apartments Maintenance
8 Villas de la Cascada 4.0 1,351,745 -19.68 GPR, Loss to Lease Average
9 209 West Jackson 4.0 1,259,859 -36.90 Income, Operating Average
Expenses, TI/LCs
10 1800 Ashley West 3.4 1,292,385 -16.58 GPR, Concessions, Average +
Collection Loss
11 Park at Le Blanc 3.2 1,131,081 -16.25 GPR, Vacancy Average
12 1370 Valley Vista 3.2 1,109,431 -25.46 TI/LC, GPR Average
13 Springbrook Apartments 3.0 1,392,339 -7.83 GPR, Management Fee Average
14 Lantern Ridge 2.9 1,128,533 -14.70 GPR, Payroll Average
16 Hampton Inn Plymouth Meeting 2.7 1,075,870 -31.23 RevPAR, Marketing Average
24 Valleywood Apartments 1.7 719,334 -10.02 GPR Average
29 Cascade Oaks 1.2 479,553 -15.24 GPR, Vacancy, Other Below Average
Income
30 Dwell on Riverside 1.2 441,957 -27.68 GPR, Payroll, Concessions Average
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DBRS MORNINGSTAR SITE INSPECTIONS
DBRS Morningstar sampled and visited 18 of the 32 loans DBRS Morningstar Sampled Property Quality
in the pool, representing 75.1% of the pool by allocated
# of % of
cutoff loan balance. DBRS Morningstar met with the on-site Loans Sample
property manager, leasing agent, or representative of the Excellent 0 0.0
borrowing entity for 14 loans, comprising 68.3% of the initial Above Average 0 0.0
pool balance. The resulting DBRS Morningstar property Average (+) 3 20.7
quality scores are highlighted in the chart to the right. Average 13 72.2
Average (-) 1 5.5
DBRS MORNINGSTAR CASH FLOW ANALYSIS Below Average 1 1.6
DBRS Morningstar completed a cash flow review and a cash Poor 0 0.0
flow stability and structural review for 18 of the 32 loans,
representing 75.1% of the pool by loan balance. For the loans not subject to an NCF review, DBRS Morningstar applied
an NCF variance of -8.4% and -18.9% to the Issuer’s As-Is and Stabilized NCFs, respectively, which reflect the average
sampled NCF variances.
The DBRS Morningstar As-Is NCF was based on the current performance of the property, without giving any credit to
future upside that may be realized upon the sponsors’ completion of their business plans. The DBRS Morningstar As-Is
sample had an average in-place NCF variance of -8.4% from the Issuer’s NCF and ranged from -49.5% to +4.1%.
The DBRS Morningstar Stabilized NCF assumed the properties stabilized at market rent and/or recently executed leases
and market expenses that DBRS Morningstar believed were reasonably achievable based on the sponsor’s business plan and
structural features of the respective loan. This often involved assuming higher-than-in-place rental rates for multifamily
properties based on significant ongoing renovations, with rents already achieved on renovated units providing the best
guidance on market rent upon renovation. The DBRS Morningstar sample had an average DBRS Morningstar Stabilized
NCF variance of -18.9% from the Issuer’s stabilized NCF and ranged from -36.9% to -7.8%.
DBRS Morningstar Sampled Property Type
90.0% 90.0
80.0% 80.0
70.0% 70.0
60.0% 60.0
50.0% 50.0
40.0% 40.0
30.0% 30.0
20.0% 20.0
10.0% 10.0
0.0% -
Anchored Full Service Industrial Limited MHC Multifamily Office Regional Self Unanchored Mixed-Use
Retail Hotel Service Hotel Mall Storage Retail
Excellent Above Average Average + Average Average - Below Average Poor Pool
February 2020 10Presale Report | XAN 2020-RSO8 Model Adjustments DBRS Morningstar applied upward cap rate adjustments to three loans, Rivington House, Plaza 1640 Apartments, and Arbor Place Apartments, which make up 4.1%, 2.8%, and 2.2% of the cutoff date pool balances, respectively. Rivington House’s adjustment reflects a leasehold interest in the property, and DBRS Morningstar adjusted the cap rates for Plaza 1640 Apartments and Arbor Place Apartments to reflect its view of the respective markets. February 2020 11
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Transaction Concentrations
DBRS Morningstar Property Type Geography
# of % of # of % of
Property Type Loans Pool State Properties Pool
Anchored Retail 0 0.0 TX 5 18.3
Full Service Hotel 0 0.0 GA 5 16.6
Industrial 0 0.0 FL 5 11.1
Limited Service Hotel 1 2.7 SC 2 10.8
MHC 2 3.1 NV 1 7.8
Multifamily 23 76.6 CA 3 7.7
Office 5 15.0 All Others 14 27.6
Regional Mall 0 0.0
Self Storage 1 2.6
Unanchored Retail 0 0.0
Mixed-Use 0 0.0
Loan Size DBRS Morningstar Market Types
# of % of # of % of
Loan Size Loans Pool Market Type Properties Pool
Large 9 50.7 8 1 4.09
(>$20.0 million) 7 1 3.96
Medium 19 45.0 6 2 1.69
($8.0-$20.0 million)
5 1 1.70
Small 4 4.3
($3.0-$8.0 million) 4 10 35.27
Very Small 0 0.0 3 12 40.69
(Presale Report | XAN 2020-RSO8
Loan Structural Features
Loan Terms: All 32 loans are IO during the initial loan term, ranging from 24 months to 48 months. Two loans have no
extension options (Greenville Portfolio and Sanctuary Lofts). Dwell on Riverside has one 11-month extension option and
the remaining 29 loans have either one or two one-year extension options.
Interest Rate: The interest rate is the greater of (1) the floating rate referencing one-month USD Libor as the index plus
the margin and (2) the interest-rate floor.
Interest-Rate Protection: All the loans in the initial pool have interest-rate caps to protect against rising interest rates
over the term of the loan except for Sanctuary Lofts (0.65% of the pool). If the DBRS Morningstar stressed interest rate
was less than the borrower’s purchased interest-rate cap, DBRS Morningstar would default to the lower of the DBRS
Morningstar stressed interest rate.
Additional Debt: No mortgage assets have existing mezzanine debt.
Pari Passu Debt: No loans have pari passu participation interests.
Future Funding: There are 28 loans, representing 86.9% of the cutoff date balance, that have a future funding component.
The aggregate amount of future funding remaining is $36.9 million, with future funding amounts per loan ranging from
$120,000 to $4.3 million. The proceeds necessary to fulfill the future funding obligations will primarily come from a
committed warehouse line and will be initially held outside the trust but will be pari passu with the trust participations.
The future funding is generally for property renovations. Each property has a business plan to execute that the sponsor
expects to increase NCF. DBRS Morningstar believes the business plans are generally achievable, given market conditions,
recent property performance, and adequate available future funding (or upfront reserves) for planned renovations.
F U TURE FUNDING N O TE S
Cut-Off Date Whole Future Funding Whole Loan Future Funding
Loan Name Loan Amount ($) Amount1 ($) Amount2 ($) Uses
Forest Cove Apartments 51,668,687 1,471,313 53,140,000 Capex
Waterside Greene 38,693,268 3,675,732 42,369,000 Capex
The Monroe 28,437,735 1,062,265 29,500,000 Capex, Maintenance
Legacy Bank Plaza 25,350,000 650,000 26,000,000 Leasing Commissions
Rivington House 21,350,000 1,150,000 22,500,000 Capex
Pineforest Place & Park Apartments 21,115,000 1,635,000 22,750,000 Capex
Villas de la Cascada 21,000,000 600,000 21,600,000 Capex
209 West Jackson 20,700,000 4,300,000 25,000,000 TI/LCs
1800 Ashley West 17,819,489 1,930,511 19,750,000 Capex
Park at Le Blanc 16,800,000 950,000 17,750,000 Capex
1370 Valley Vista 16,700,000 800,000 17,500,000 Capex, Tenant
Improvements
Springbrook Apartments 15,555,000 1,845,000 17,400,000 Capex
Lantern Ridge 15,350,494 1,099,506 16,450,000 Capex
Plaza 1640 Apartments 14,700,000 500,000 15,200,000 Debt Service
February 2020 13Presale Report | XAN 2020-RSO8
F U TURE FUNDING N O TE S
Cut-Off Date Whole Future Funding Whole Loan Future Funding
Loan Name Loan Amount ($) Amount1 ($) Amount2 ($) Uses
North Fork Self Storage 13,800,000 800,000 14,600,000 Capex
Winston-Salem Portfolio 12,281,900 2,688,100 14,970,000 Capex
Hawk Ridge 11,665,000 785,000 12,450,000 Capex
Arbor Place Apartments 11,500,000 1,000,000 12,500,000 Capex
Cottages of Cypresswood 11,494,000 250,000 11,744,000 Capex
La Estrella Vista 11,005,000 120,000 11,125,000 Capex
Valleywood Apartments 8,900,000 2,250,000 11,150,000 Capex
Greenville MHP Portfolio 8,200,000 750,000 8,950,000 Capex, Payroll
Ocean Tide MHP 8,100,000 722,952 8,822,952 Capex
Camelia Apartments 7,600,000 475,000 8,075,000 Capex
Pinebrook Manor 6,505,810 286,940 6,792,750 Capex
Cascade Oaks 6,190,000 610,000 6,800,000 Capex
Dwell on Riverside 6,074,907 1,093,093 7,168,000 Capex
960 Penn Ave 5,425,000 3,425,000 8,850,000 Capex, TI/LCs
1. Cut-Off date unfunded future funding amount.
2. Whole loan amount including unfunded future funding.
F U TURE FUNDING CO M M I TM E N TS
Total Future Funding
Total Future Maximum Future Commiments
Loan Name Funding ($) Funding Allowed ($) Allowed (%) Loan Closed?
Forest Cove Apartments 1,471,312.79 2,550,000.00 57.7 Y
Waterside Greene 3,675,731.73 4,536,000.00 81.0 Y
The Monroe 1,062,264.54 1,435,000.00 74.0 Y
Legacy Bank Plaza 650,000.00 650,000.00 100.0 Y
Rivington House 1,150,000.00 1,150,000.00 100.0 Y
Pineforest Place & Park Apartments 1,635,000.00 1,635,000.00 100.0 Y
Villas de la Cascada 600,000.00 600,000.00 100.0 Y
209 West Jackson 4,300,000.00 5,300,000.00 81.1 Y
1800 Ashley West 1,930,511.13 2,010,000.00 96.0 Y
Park at Le Blanc 950,000.00 950,000.00 100.0 Y
1370 Valley Vista 800,000.00 800,000.00 100.0 Y
Springbrook Apartments 1,845,000.00 1,845,000.00 100.0 Y
Lantern Ridge 1,099,506.44 1,250,000.00 88.0 Y
Plaza 1640 Apartments 500,000.00 500,000.00 100.0 Y
North Fork Self Storage 800,000.00 800,000.00 100.0 Y
Winston-Salem Portfolio 2,688,100.00 2,688,100.00 100.0 Y
February 2020 14Presale Report | XAN 2020-RSO8
F U TURE FUNDING CO M M I TM E N TS
Total Future Funding
Total Future Maximum Future Commiments
Loan Name Funding ($) Funding Allowed ($) Allowed (%) Loan Closed?
Hawk Ridge 785,000.00 785,000.00 100.0 Y
Arbor Place Apartments 1,000,000.00 1,000,000.00 100.0 Y
Cottages of Cypresswood 250,000.00 250,000.00 100.0 Y
La Estrella Vista 120,000.00 770,000.00 15.6 Y
Valleywood Apartments 2,250,000.00 2,250,000.00 100.0 Y
Greenville MHP Portfolio 750,000.00 750,000.00 100.0 Y
Ocean Tide MHP 722,952.00 722,952.00 100.0 Y
Camelia Apartments 475,000.00 475,000.00 100.0 Y
Pinebrook Manor 286,940.00 367,000.00 78.2 Y
Cascade Oaks 610,000.00 610,000.00 100.0 Y
Dwell on Riverside 1,093,093.16 1,200,000.00 91.1 Y
960 Penn Ave 3,425,000.00 3,625,000.00 94.5 Y
Leasehold: One loan is subject to a leasehold position. Rivington House (4.1% of the pool), as part of its recapitalization,
is selling the fee interest with a new lease term of 99 years, and rent will increase by 2% annually, with a CPI adjustment
in year 11 and every 10 years subsequently. DBRS Morningstar made an upward cap rate adjustment to account for the
leasehold position.
R E SERVE REQ UIRE M E N T B O R R O W ER ST R U C T U R E
Type Loans % of Pool Type Loans % of Pool
Tax Ongoing 32 100.0 SPE with Independent Director and 6 39.4
Non-Consolidation Opinion
Insurance Ongoing 32 100.0 SPE with Independent Director 7 21.6
Only
CapEx Ongoing 15 45.9 SPE with Non-Consolidation 0 0.0
Opinion Only
Leasing Costs Ongoing1 3 100.0 SPE Only 19 39.0
1. Percent of office, retail, industrial and mixed use assets based on DBRS
property types.
Interest Only DBRS Morningstar Expected Amoritization
# of % of # of % of
Loans Pool Loans Pool
Full IO 31 98.0 0.0% 31 98.0
Partial IO 1 2.0 0.0%-5.0% 1 2.0
Amortizing 0 0.0 5.0%-10.0% 0 0.0
10.0%-15.0% 0 0.0
15.0%-20.0% 0 0.0
20.0%-25.0% 0 0.0
>25.0% 0 0.0
Note: For certain ARD loans, expected amortization may include amortization
expected to occur after the ARD but prior to single/major tenant expiry.
February 2020 15Presale Report | XAN 2020-RSO8
DBRS Morningstar Sponsor Strength
# of % of
Loans Pool
Strong 1 4.9
Average 30 92.5
Weak 1 2.7
Bad/Litigious 0 0.0
Property Release: One loan, representing 2.4% of the initial trust balance, allows for the release of one or more properties
or a portion of the mortgaged property, subject to release prices above the allocated loan amounts of the respective
properties and/or certain leverage tests prescribed in the individual loan agreements.
Property Substitution: No loans in the pool allow for the substitution of properties.
Terrorism Insurance: As of the cutoff date, all loans carry terrorism insurance.
February 2020 16Presale Report | XAN 2020-RSO8
Forest Cove Apartments
Atlanta, GA
Loan Snapshot
Seller
XAN 2020-RSO8
Ownership Interest
Fee
Trust Balance ($ million)
51.7
Loan PSF/Unit ($)
82,260
Percentage of the Pool (%)
9.9
Fully Extended Loan
Maturity/ARD
April 2024 CO LLATE RA L SU MMA RY
Amortization
Interest Only DBRS Morningstar
Multifamily Year Built/Renovated 1985/2015-2018
Property Type
DBRS Morningstar As-Is
DSCR (x) City, State Atlanta, GA Physical Occupancy 92.9%
0.9
Units 646 Physical Occupancy Date Jan-20
DBRS Morningstar Stabilized
DSCR (x)
1.0 DBRS MORNINGSTAR ANALYSIS
DBRS Morningstar As-Is SITE INSPECTION SUMMARY
Issuance LTV (%)
DBRS Morningstar toured the exterior and interior of the property on Wednesday,
83.7
DBRS Morningstar Stabilized
February 19, 2020, at 2:00 p.m. Based on the site inspection and management meeting,
Balloon LTV (%) DBRS Morningstar found the property quality to be Average.
69.7
DBRS Morningstar Forest Cove Apartments consists of 75 two- and three-story wood framed buildings
Property Type
located across a hilly and wooded terrain with dense groves of trees. The 646-unit
Multifamily
DBRS Moringstar
property was originally constructed in 1985, and the former owner partially updated it
Property Quality during 2015-18. The property is conveniently near an I-85 interchange with commercial
Average and retail developments. A large monument sign at the street entrance announces the
Debt Stack ($ million) property to motorists on the well-traveled street. A bus stop for school children is at
Trust Balance the street entrance. The management and leasing office is near the entrance and just
51.7 outside the security gates to the residential buildings.
Pari Passu
0.0 The sponsor acquired the property on March 28, 2019. DBRS Morningstar toured the
Remaining Future Funding
property with the property manager, who has been familiar with the area for more than
1.5
30 years and has been a property manager at similar properties for 16-17 years. The
Mortgage Loan Including
Future Funding property manager, key leasing team, and maintenance crew transferred to the property
53.1 following their involvement with a similar renovated property the sponsor sold.
Loan Purpose
Acquisition Management stated that the tenant demographics cover a wide range of ages and
Equity Contribution/ employment sectors. Families live in the largest percentage of occupied units, with
(Distribution) ($ million) singles and couples/roommates making up the remaining bulk of tenants. There are
16.2
February 2020 17Presale Report | XAN 2020-RSO8 FOREST COVE APARTMENTS – ATLANTA, GA few empty nesters and retirees. The tenants primarily work at local jobs in hospitals, retail, restaurants, services, the UPS transfer station, construction, and various blue collar industries. Renovations began last summer on the building exteriors and grounds, while the sponsor mulled over the style and features of the to-be-renovated apartments. To date this year, 26 units have been renovated and are ready for lease. Seven more units are nearly completed and will be available for lease soon. Seven additional units will receive renovations the last week of February. Occupancy at the time of inspection was 91% (93% preleased). The property was 94% occupied in mid-2019, but some tenants were evicted for not paying rent. The renovation contractors can turn roughly 20 units at a time over a 45-day span. This could involve a full upgrade from a classic apartment with original finishes and appliances or from a partially upgraded unit under the previous owner. As seen on the site tour, the previous owner’s improvements were spotty and inconsistent regarding unit finishes and appliance replacements. The new owner intends to have a consistent design style and appliance package for all units. Grey tones will dominate for wall paint, wood laminate plank flooring, carpeting, granite kitchen countertops and bathroom vanity tops, with stainless-steel appliances and white kitchen cabinets. The cabinet boxes will remain and receive new paint, but there will be new cabinet doors along with new hardware. The sponsor will replace the original interior hollow- core doors with paneled doors, also painted white. DBRS Morningstar saw several of the newly renovated units and found them to be an appealing upgrade from the mismatched and dated look of both the original, classic apartments and the partially renovated units. The building exteriors are grey/blue in color with white trim for windows and doors. The roofing appears in average condition. One roof has accumulated leaf and pine needle debris. Management stated that the roofs and gutters undergo inspections and cleanings twice a year. The pavement throughout the property is heavily cracked, but it has a layer of sealcoat and will be coated again in the summer. Surface parking is in front of the buildings. Asphalt speed bumps throughout the site maintain a slow pace of travel on the hills and protect the children on site. There was no significant deterioration or potholes. Certain concrete steps into buildings have settled, and the sponsor will replace them and add new handrails in the spring. Residents can enter the units via covered but open metal stairways. As mentioned, the site is heavily wooded with pine and deciduous trees. The buildings have foundation shrubbery and grassy front areas. There are several rock outcroppings throughout the site. February 2020 18
Presale Report | XAN 2020-RSO8
FOREST COVE APARTMENTS – ATLANTA, GA
DBRS MORNINGSTAR NCF SUMMARY
N C F ANALYSIS
Issuer DBRS
T-4 July 2019 Stabilized Stabilized Morningstar NCF
2017 2018 Annualized Appraisal ($) NCF ($) NCF ($) Variance (%)
GPR ($) 6,651,215 7,009,969 7,486,264 9,070,265 9,032,213 7,908,816 -12.44
Other Income ($) 345,633 379,729 341,529 487,356 414,940 397,636 -4.17
Vacancy & Concessions ($) -877,308 -864,226 -817,861 -782,885 -936,956 -882,215 -5.84
EGI ($) 6,119,540 6,525,472 7,009,932 8,774,736 8,510,197 7,424,236 -12.76
Expenses ($) 2,822,585 2,841,784 3,154,190 3,750,543 3,842,469 3,822,461 -0.52
NOI ($) 3,296,955 3,683,688 3,855,742 5,024,193 4,667,728 3,601,776 -22.84
Capex ($) 0 0 0 176,475 193,800 193,800 0.00
NCF ($) 3,296,955 3,683,688 3,855,742 4,847,718 4,473,928 3,407,976 -23.83
The DBRS Morningstar Stabilized NCF is based on the DBRS Morningstar North American Commercial Real Estate Property
Analysis Criteria. The resulting DBRS Morningstar Stabilized NCF was $3,407,976, a variance of -23.8% from the Issuer’s
stabilized NCF of $4,473,928.
The primary drivers of the variance are gross potential rent and management fees. DBRS Morningstar assumed a $50 per
unit rent premium for the renovated units versus the Issuer’s $166 premium assumption. Currently, the renovated units are
achieving rents that are $55 per unit above the appraiser’s concluded renovated rents. DBRS Morningstar generally based
expenses on the appraisal estimates. The DBRS Morningstar expense ratio of 51.5% is higher than the Issuer’s ratio of 45.2%
and slightly higher than the historical expense ratios at the property. Total stabilized expenses approximate the appraisal
estimate and are lower than the Issuer’s estimation because of lower management fees, which is a function of lower EGI.
DBRS MORNINGSTAR VIEWPOINT
The trust loan is a $53.1 million mortgage loan with an initial funding of $50.56 million and $2.6 million of future funding
targeted for capital improvements and renovations of the property’s 646 apartment units. The borrower has contributed
$16,182,124 in equity to facilitate the acquisition of Forest Cove Apartments, a 35-year old market-rate apartment complex
in Atlanta.
The loan is secured by Forest Cove Apartments, a garden-style apartment property built in 1985 with renovations during
2015-18 under the previous owner. The previous owner had updated about 72% of the units with an investment of
approximately $4.1 million for interior and exterior improvements. Roughly 52% of the units were fully renovated and 20%
received partial renovations. The previous owner also added several amenities. The most prominent is the sports court, a
large dome-shaped tent with a metal space frame that shelters an artificial turf soccer field, numerous gym apparatus, and
other play sites. It appeared to be well used. The sponsor plans to add new amenities including a fitness center and a dog
park as well as plans to enhance existing amenities. Furthermore, the current owner will continue improving the remaining
units, upgrading the partially completed units, and modifying the previous owner’s fully renovated units over the next 30
months to a consistent overall appearance. The estimated cost of $2.5 million will include interior renovations to 312 of
the 646 units and $898,450 for exterior renovations and the improvements outlined above. The sponsor, experienced in
similar renovated properties in the Atlanta market, expects to charge a rent premium of $75 per unit to $100 per unit for the
renovated units. DBRS Morningstar conservatively estimated a premium of $50 per unit.
The property is the largest of three similar apartment complexes from the same group of investors in 1985. The other
two properties are adjacent to the Forest Cove Apartments, and they have received little or moderate upgrades. The
February 2020 19Presale Report | XAN 2020-RSO8
FOREST COVE APARTMENTS – ATLANTA, GA
property manager stated that these sister properties, Regal Vista and Ashford Walk, are the main competitors to Forest
Cove Apartments and are likely to get upgrades in the future. Being the first to fully renovate with upscale features and
appliances, the property should become established in the market in advance of the competition.
C OMPETITIVE SET
Avg. Rental
Distance from Year Built/ Rate Per Avg. Unit
Property Location Subject Units Renovated Occupancy Unit Size (SF)
Pleasantdale Crossing Doraville, GA within 1.0 mile 210 1984 98.0% $932 1,003
Regal Vista Doraville, GA within 1.0 mile 218 1985 94.0% $993 864
Ashford Walk Doraville, GA within 1.0 mile 270 1983 94.0% $1,046 789
Azalea Ridge Doraville, GA within 1.0 mile 281 1971 95.0% $1,001 802
Shadow Lake Apartments Doraville, GA within 1.0 mile 228 1988 95.0% $1,003 1,025
Total/Wtd. Avg. Comp. Set Various, State Various 241 Various 95.0% $998 896
Forest Cove - Subject Atlanta, GA n/a 646 1985 91.0% $895 826
Source: Appraisal, except the Subject figures are based on the rent roll dated January, 2019.
The property benefits from its location approximately 2.0 miles from the interchange of I-85 and I-285 and 15 miles
northeast of downtown Atlanta. The area underwent significant development several decades ago resulting in commercial,
industrial, and technological markets along the interstates and major thoroughfares. From data provided by the appraiser,
Newmark Knight Frank, the area is well populated, with more than 100,000 people living within a three-mile radius and
nearly 300,000 within a five-mile radius. The area includes neighborhood shopping centers, grocers, restaurants, personal
services, and numerous schools from preschool to high school, both public and private. The property also provides an
afterschool program and resource center for children of its adult residents. A new school building will open in 2022 on
the vacant ground across the street from the property. This should encourage additional interest from families, which are
the property’s predominant demographic. Management estimates that roughly 250 children of all ages live on the site and
expects more once the school is open.
The loan exhibits a high LTV of 83.7% based on the fully funded loan balance and the as-is appraised value and a lower, but
still highly leveraged, stabilized LTV of 73.9%.
The market is experiencing growth, and rents have been improving. Renovations have only just begun, but the up-to-date
appearance of the new units and the property’s convenient location should enhance its appeal to young and family tenants.
The capital expenditure reserve account and the significant equity investment from the sponsor should provide the needed
funds to fully upgrade the planned number of units.
February 2020 20Presale Report | XAN 2020-RSO8
Tribeca North Luxury Apartments
North Las Vegas, NV
Loan Snapshot
Seller
XAN 2020-RSO8
Ownership Interest
Fee
Trust Balance ($ million)
41.0
Loan PSF/Unit ($)
131,410
Percentage of the Pool (%)
7.8
Fully Extended Loan
Maturity/ARD
January 2025 CO LLATE RA L SU MMA RY
Amortization
Interest Only DBRS Morningstar
Multifamily Year Built/Renovated 2009/2017
Property Type
DBRS Morningstar As-Is
DSCR (x) City, State North Las Vegas, NV Physical Occupancy 92.6%
1.2
Units 312 Physical Occupancy Date Nov-19
DBRS Morningstar Stabilized
DSCR (x)
1.2 DBRS MORNINGSTAR ANALYSIS
DBRS Morningstar As-Is SITE INSPECTION SUMMARY
Issuance LTV (%)
DBRS Morningstar toured the interior and exterior of the property with the sponsor’s
67.1
DBRS Morningstar Stabilized
regional property manager on February 12, 2020, at 11 a.m. Based on the site inspection,
Balloon LTV (%) DBRS Morningstar found the property quality to be Above Average.
62.7
DBRS Morningstar Property Built in 2009, the collateral is a 312-unit, three-story, garden-style multifamily
Type
Multifamily
apartment complex in North Las Vegas, Nevada, 10 miles from the CBD and an
DBRS Moringstar Property approximate 20-minute drive to the Las Vegas strip. A small casino is in the early stages
Quality of development adjacent to the property, while to the south and east are single-family
Average + homes. A 500,000 sf shopping center is 1.5 miles from the property, with a Walmart
Debt Stack ($ million) supercenter, OfficeMax, Petco, and Rite Aid as anchors along with several dining
Trust Balance options and discount stores in other nearby retail centers.
41.0
Pari Passu
The apartment interiors were recently renovated with Formica countertops in the
0.0
kitchens and bathrooms and black appliances. Additionally, USB outlets, ceiling fans,
Remaining Future Funding
and new faucets were included in the upgrade, and the floors were mostly carpeted.
0.0
Common area amenities included a dog park, three pools, a fitness center, grilling
Mortgage Loan Including
Future Funding areas, a children’s playground, and upgraded tenant lounge areas in the clubhouse. All
41.0 common area amenities appeared to be well kept and modern. Management reported
Loan Purpose an approximate $115 per unit rent premium since the recent upgrades. Future capex
Refinance will include repainting the exterior, adding LED lighting on exterior walls, resurfacing
Equity Contribution/ the pool, and inserting an area focusing on CrossFit-style workouts. Additionally,
(Distribution) ($ million)
there are 56 detached one-car garage spaces that are leased for approximately $85 per
-8.0
month. DBRS Morningstar viewed a 780 sf one-bedroom unit asking $1,069 per month
February 2020 21Presale Report | XAN 2020-RSO8
TRIBECA NORTH LUXURY APARTMENTS – NORTH LAS VEGAS, NV
and a 1,077 sf two-bedroom unit asking $1,339 per month. Reis reported asking rents in the North Las Vegas submarket for
properties built after 2009 at $1,299 per month as of YE2019. Additionally in this submarket, Reis showed one-bedroom
units averaging $958 and two-bedroom units averaging $1,108 as of Q4 2019, an approximate increase over the North Las
Vegas average of 11.6% and 20.8% on one- and two-bedroom units, respectively. The sponsor reported Tribeca North as
the market leader in rent within the North Las Vegas submarket. At the time of the site visit, management reported a 92%
occupancy. While on site, DBRS Morningstar did not notice any deferred maintenance. Other than the minor exterior
improvements mentioned above to be completed, the heavy lift of property upgrades appeared to be mostly finished.
DBRS MORNINGSTAR NCF SUMMARY
N C F ANALYSIS
Appraiser Issuer DBRS
T-12 October Stabilized Stabilized Morningstar NCF
2017 2018 2019 ($) ($) NCF ($) NCF ($) Variance (%)
GPR ($) 3,660,516 4,068,854 4,436,862 4,837,307 4,837,307 4,623,102 -4.43
Other Income ($) 226,596 342,626 449,281 471,740 471,740 449,281 -4.76
Vacancy & Concessions ($) -296,451 -279,944 -342,955 -357,231 -397,098 -425,441 -4.63
EGI ($) 3,590,661 4,131,536 4,543,187 4,951,816 4,911,949 4,646,942 -4.44
Expenses ($) 1,367,998 1,390,146 1,487,162 1,550,581 1,637,928 1,702,139 2.02
NOI ($) 2,222,662 2,741,390 3,056,026 3,401,235 3,274,021 2,944,803 -7.68
Capex ($) 0 0 0 80,340 88,608 88,608 0.00
NCF ($) 2,222,662 2,741,390 3,056,026 3,320,895 3,185,413 2,856,195 -7.89
The DBRS Morningstar Stabilized NCF is based on the DBRS Morningstar North American Commercial Real Estate Property
Analysis Criteria. The resulting Stabilized NCF is $2,856,195, which is a -6.1% variance from the Issuer’s stabilized NCF.
The main drivers of the variance are gross potential rent, which DBRS Morningstar tied to the in-place rents and used an
expense plug on controllable expenses to achieve closer to $2,000 per unit to match its view of expenses typical of this asset
type. Since the sponsor has largely executed its business plan, DBRS Morningstar did not assume any upside in cash flow
from the property’s current performance.
February 2020 22Presale Report | XAN 2020-RSO8 TRIBECA NORTH LUXURY APARTMENTS – NORTH LAS VEGAS, NV DBRS MORNINGSTAR VIEWPOINT DBRS Morningstar believes the loan on Tribeca North will continue to perform because the sponsor has already executed its business plan as anticipated. The property shows extremely well and has achieved desirable rent premiums exceeding $100 per unit. Moreover, additional exterior improvements should continue to enhance Tribeca North Luxury Apartments’ curb appeal and add value to maintain its submarket leader position in rent. The submarket appears healthy; Reis has reported that average rent has risen in every quarter since Q1 2014. New construction does not appear alarming, with Reis forecasting an approximate 2.5% increase in supply through 2024 and a vacancy rate of 3.6% versus the 2.7% vacancy rate as of Q4 2019. Management reported some prospective tenants have considered the location to be farther out; however, residents can drive to the Las Vegas strip in 20-25 minutes. The sponsor, The Bascom Group, is a highly experienced investor in garden- style, midrise, and high-rise apartment complexes all over the United States, which should further enhance confidence in the loan’s performance. DBRS Morningstar believes the property is in a good position to either be refinanced with a longer term fixed-rate loan or sold to an institutional investor when the loan matures. February 2020 23
Presale Report | XAN 2020-RSO8
Waterside Greene
Greenville, SC
Loan Snapshot
Seller
XAN 2020-RSO8
Ownership Interest
Fee
Trust Balance ($ million)
38.7
Loan PSF/Unit ($)
112,087
Percentage of the Pool (%)
7.4
Fully Extended Loan
Maturity/ARD
July 2024 CO LLATE RA L SU MMA RY
Amortization
Interest Only DBRS Morningstar
Multifamily Year Built/Renovated 2005
Property Type
DBRS Morningstar As-Is
DSCR (x) City, State Greenville, SC Physical Occupancy (%) 73.5
0.6
Units 378 Physical Occupancy Date December 2019
DBRS Morningstar Stabilized
DSCR (x)
1.0 DBRS MORNINGSTAR ANALYSIS
DBRS Morningstar As-Is SITE INSPECTION SUMMARY
Issuance LTV (%)
The collateral is a 378-unit Class B garden-style multifamily development built in two
89.4
DBRS Morningstar Stabilized
phases. Phase I was developed in 2005 and included 314 units. Phase II added 64 units
Balloon LTV (%) in 2015. The complex consists of 18 two-story buildings on 25 acres. Units include one-,
70.7 two-, and three-bedroom floorplans ranging in size from 685 sf to 1,456 sf. The amenities
DBRS Morningstar Property are competitive for the market and include a pool, a sports court, a fitness room, a
Type
Multifamily
laundry room, a business center, dog parks, a playground, grilling areas, storage units,
DBRS Moringstar Property and 18 detached garages. Each unit has a fully equipped kitchen, a patio/balcony, and
Quality washer/dryer connections. Phase I units have black or white appliances with linoleum
Average countertops. Phase II units have stainless-steel appliances, granite countertops, and
Debt Stack ($ million) nine-foot ceilings. There are controlled access gates for security. New management has
Trust Balance continued to make upgrades to the property while pushing rental rates.
38.7
Pari Passu
The property is in the southeast quadrant of Greenville, South Carolina, with convenient
0.0
access to I-385 and I-85. The property is along Woodruff Road, less than half a mile from
Remaining Future Funding
the Woodruff Road commercial corridor, one of the larger retail developments in the
3.7
city. Location is the primary driver for the community, and the tenant mix is primarily
Mortgage Loan Including
Future Funding young professionals and small families who value the proximity to local schools, retail
42.4 and restaurants, and thoroughfares.
Loan Purpose
Acquisition The property is currently operating at a vacancy rate of around 30%. Management
Equity Contribution/ explained that BMW Group (BMW) had leased approximately 30 apartments before
(Distribution) ($ million)
August 2019 when management took over. BMW has since vacated. Coupled with rent
11.2
February 2020 24Presale Report | XAN 2020-RSO8
WATERSIDE GREENE – GREENVILLE, SC
increases in the fall of 2019, the property has had unusually high vacancy, but management indicated that leasing activity
is picking up.
Nearby competing properties include Plantations at Haywood and Hawthorne at Carlyle. Both have similar curb appeal,
amenities, floorplans, and tenant profiles. Trailside Verdae is a recently constructed 276-unit complex one mile west of
Waterside Greene Apartments at 180 Woodruff Road.
C OMPETITIVE SET
Distance Avg. Rental
from Subject Year Occupancy Rate Per Avg. Unit
Property Location (Miles) Units Built (%) Unit ($) Size (SF)
Hawthorne at the Carlyle Greenville, SC 0.7 280 1998 92.1 1,340 1,033
The Preserve at Woods Lake Greenville, SC 1.3 232 1996 93.1 1,029 996
Bell Roper Mountain Greenville, SC 0.9 268 2001 95.5 1,053 1,089
Azalea Hill Apartments Greenville, SC 1.3 160 1997 93.0 1,045 831
The Aventine Greenville Greenville, SC 1.7 346 2013 91.4 1,096 961
Avana at Carolina Point Greenville, SC 1.7 346 2008 91.3 1,062 1,073
Total/Wtd. Avg. Comp. Set Greenville, SC Various 1,632 Various 92.6 1,109 1,010
Waterside Greene Greenville, SC n/a 378 2005 95.0 1,031 996
Source: Appraisal.
February 2020 25Presale Report | XAN 2020-RSO8
WATERSIDE GREENE – GREENVILLE, SC
DBRS MORNINGSTAR NCF SUMMARY
N C F ANALYSIS
T-4 October DBRS
2019 Morningstar NCF
2017 ($) 2018 ($) Annalized ($) Issuer NCF ($) NCF ($) Variance (%)
GPR ($) 4,516,709 4,530,621 5,030,117 5,425,339 5,392,550 -0.60
Other Income ($) 209,619 231,529 217,866 695,630 361,315 -48.06
Vacancy & Concessions ($) -363,790 -315,980 -1,255,750 -459,073 -458,962 -0.02
EGI ($) 4,362,538 4,446,170 3,992,233 5,661,896 5,294,903 -6.48
Expenses ($) 1,755,551 1,875,808 1,933,841 2,271,853 2,328,538 2.50
NOI ($) 2,606,987 2,570,362 2,058,392 3,390,043 2,966,365 -12.50
Capex ($) 0 0 0 94,500 94,500 0.00
NCF ($) 2,606,987 2,570,362 2,058,392 3,295,543 2,871,865 -12.86
The DBRS Morningstar Stabilized NCF is based on the DBRS Morningstar North American Commercial Real Property
Analysis Criteria. The resulting DBRS Morningstar Stabilized NCF was $2,871,865, representing a -12.9% variance from the
Issuer’s stabilized NCF of $3,295,543.
The primary drivers of the variance include gross potential rent, management fees, and operating expenses. DBRS
Morningstar generally estimated stabilized gross potential rent by grossing up renovated and to-be renovated units to
the appraiser’s stabilized market rent estimates by unit type, resulting in a nearly -$257,000 variance from the Issuer’s
stabilized gross potential rent estimate, for which a basis was not provided. DBRS Morningstar estimated a management
fee of 4.0%, compared with the Issuer’s estimate of 3.0%, and additionally inflated operating expenses by 6.0% over the
T-12 period ended March 31, 2019. By contrast, the Issuer generally based stabilized operating expenses on the appraiser’s
stabilized estimate.
DBRS MORNINGSTAR VIEWPOINT
The collateral is generally well located with frontage along a moderately well-trafficked arterial roadway (Woodruff Road)
and generally average accessibility relative to its competitors. Per the appraisal, the Greenville area is one of the wealthiest
regions in South Carolina, though the reported median household income within a one- and three-mile radius of the
collateral is below the U.S. national average of $58,828. The appraisal cites Greenville as being one of the fastest-growing
urban markets in the United States, home to several corporate headquarters including ScanSource, Inc. and Michelin.
Other large corporate presences in the area include General Electric Company, Lockheed Martin Corporation, and BMW.
Per management, BMW had once leased roughly 30 apartments at the collateral but vacated following the current sponsor’s
takeover in August 2019. Per Reis, the vacancy within the collateral’s South Greenville County submarket was up 100 basis
points from the five-year average in Q4 2019 and will continue to rise to an annual average of 6.9% over the five-year period
ending December 2023, with 947 units scheduled for completion between 2020 and 2022 alone. The influx of new supply
represents a decline in Reis’ inventory growth forecast compared with the five-year period ended December 2018, with
approximately 33.0% of the submarket’s inventory constructed after 2009 and 54.0% constructed after 2000 as of Q4 2019.
With financing from this transaction, the sponsor plans to upgrade roughly 75% of the collateral’s Phase I units and 50%
of the collateral’s Phase II units, investing a total of nearly $4.9 million ($12,897 per unit) in capital improvements across
the property. Interior upgrades will include the addition of stainless-steel appliances, quartz kitchen countertops, new
cabinetry, upgraded lighting packages, vinyl wood plank flooring, and several common area improvements including
upgrades to the leasing center, a new mailbox and package room, a renovation of the existing tennis courts into a new
clubhouse/resident lounge with an expansive glassed-in fitness center, the transition of a car wash port to a dog wash
February 2020 26Presale Report | XAN 2020-RSO8 WATERSIDE GREENE – GREENVILLE, SC station, new exterior paint, signage upgrades, landscaping upgrades, and parking lot resurfacing. The sponsor plans to renovate units as they turn over the loan period and projects monthly rental premiums ranging from $200 per unit to $400 per unit, with renovated units already averaging a premium of $222 per unit. The DBRS Morningstar Stabilized NCF implies a weighted-average rental premium of $98 per unit (accounting for both renovated and nonrenovated units. Overall, DBRS Morningstar believes such improvements should effectively enhance the collateral’s competitive position and boost cash flow performance despite the recent and continued influx of multifamily supply to the Greenville metropolitan area. Initial loan proceeds of $37.8 million in addition to nearly $10.5 million of borrower equity financed the sponsor’s $47.0 million acquisition of the collateral, covered $949,089 of closing costs and fees associated with the transaction, and funded a $250,000 upfront capital improvement escrow. The loan permits for up to roughly $4.5 million in additional funding for the sponsor to execute the proposed renovation plan. The three-year, floating-rate loan has two 12-month extension options that are exercisable if the sponsor achieves certain LTV and debt yield hurdles set forth in the loan agreement. The loan is IO during the initial loan term but switches to a 30-year amortization schedule during the extension periods, should the sponsor choose to elect these options. The fully funded loan amount represents a relatively high loan- to-purchase price ratio of 90.1% and high leverage financing based on a stabilized LTV of 72.8% based on the appraiser’s May 2021 stabilized value estimate of $58.2 million. Despite the initial high leverage, the DBRS Morningstar Stabilized NCF represents a coverable 1.21x DSCR and, holding all else constant, a break-even occupancy of approximately 84.0% based on the transaction’s debt service cap of approximately $2.4 million. February 2020 27
Presale Report | XAN 2020-RSO8
The Monroe
Tallahassee, FL
Loan Snapshot
Seller
XAN 2020-RSO8
Ownership Interest
Fee
Trust Balance ($ million)
28.4
Loan PSF/Unit ($)
102,431
Percentage of the Pool (%)
5.4
Fully Extended Loan
Maturity/ARD
August 2024 CO LLATE RA L SU MMA RY
Amortization
Interest Only DBRS Morningstar
Multifamily Year Built/Renovated 1999/2019
Property Type
DBRS Morningstar As-Is
DSCR (x) City, State Tallahassee, FL Physical Occupancy (%) 82.3
0.8
Units 288 Physical Occupancy Date December 2019
DBRS Morningstar Stabilized
DSCR (x)
1.0 DBRS MORNINGSTAR ANALYSIS
DBRS Morningstar As-Is SITE INSPECTION SUMMARY
Issuance LTV (%)
DBRS Morningstar toured interior and exterior of The Monroe on February 18, 2020.
83.1
DBRS Morningstar Stabilized
Based on the site inspection and management meeting, DBRS Morningstar found the
Balloon LTV (%) property quality to be Average.
71.0
DBRS Morningstar Property The subject property collateral is a 288-unit garden-style multifamily complex located
Type
Multifamily
on a land area of 36.0 acres. Improvements were built in 1999 and consist of 17 three-
DBRS Moringstar Property story buildings of wood frame construction with composite sided exterior walls and
Quality pitched composite roofs. Unit mix includes one-, two-, and three-bedroom floor plans.
Average Average unit size is 1,497 sf, ranging from 1,095 sf for the one-bedroom floor plan up to
Debt Stack ($ million) 1,695 sf for the three-bedroom floor plan. Unit finishes include a mix of carpet, vinyl,
Trust Balance and vinyl plank flooring; stainless-steel appliances; painted wood cabinets; and granite
28.4
countertops. Unit amenities include a small laundry room with a full-size washer/dryer
Pari Passu
in each unit, a balcony/patio, storage, and a walk-in pantry and closets. The subject
0.0
was originally built as a student housing property but redeveloped to conventional
Remaining Future Funding
multifamily in 2017. As such, amenities are somewhat extensive for traditional
1.1
multifamily product, including a clubhouse with a recreation room, billiards, a fitness
Mortgage Loan Including
Future Funding center, a media room, a computer room, and a movie theater. Exterior amenities include
29.5 a resort-size pool, covered poolside grilling areas, a fire pit, a volleyball court, and a
Loan Purpose dog park.
Acquisition
Equity Contribution/ The subject property is located in northwest Tallahassee, Florida, approximately
(Distribution) ($ million)
4.5 miles from the CBD. The subject sits on the east side of Old Bainbridge Road, a
10.0
primary northwest–southeast arterial that provides direct access into downtown
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