Morningstar DBRS assigns AA (high) rating to Chastleton Cooperative mortgage loan in Washington, D.C.

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Chastleton Cooperative loan rating

Highlights

Morningstar DBRS assigns AA (high) rating with Stable trend to 2.55% mortgage loan due March 1, 2041, for Chastleton Cooperative Association, Inc.
The $13.7 million loan, secured by a 300-unit property valued at $55.6 million, features a 24.6% loan-to-value ratio and 4.4x debt service coverage ratio.
Property achieves 100% occupancy with a debt yield of 28.4% as of May 2026, supporting a low near-term credit risk assessment for investors.

Loan rating and property fundamentals

As reported by Morningstar DBRS, the 2.55% mortgage loan due March 1, 2041, made to Chastleton Cooperative Association, Inc., is assigned a credit rating of AA (high) with a Stable trend. The rating agency says the assessment is supported by a 24.6% loan-to-value ratio based on its concluded property value of $55.6 million, along with stable and predictable operating performance.

The loan is secured by the fee-simple interest in a 300-unit mid-rise co-operative property at 1701 16th Street NW in Washington, D.C. Morningstar DBRS says the building benefits from a dense residential setting near DuPont Circle and Logan Circle, with access to employers, retail corridors, and commercial activity along 16th Street NW and New Hampshire Avenue NW.

Constructed in 1920 and renovated in 2006 and 2008, the eight-story building includes 60 studio units, 186 one-bedroom apartments, and 54 two-bedroom apartments. Amenities include 69 surface parking spaces, controlled access, a 24-hour concierge, a ballroom, fitness center, and rooftop deck.

Credit metrics and market implications

Morningstar DBRS says the loan carries a current balance of $13.7 million as of May 2026 and posts a debt service coverage ratio of 4.4 times and a debt yield of 28.4%. The agency also says the amortizing loan structure and qualitative adjustments tied to cash flow volatility, property quality, and market fundamentals support the rating outcome.

For its underwriting, Morningstar DBRS concludes rental revenue using market rents and assumes a vacancy rate of 5.4%, even though the property is reported at 100% occupancy on the December 31, 2024 rent roll. The combination of full occupancy, low leverage, and strong debt service capacity points to limited near-term credit risk for this Washington, D.C. multifamily co-operative exposure.

Morningstar DBRS says no environmental, social, or governance factors have a significant or relevant effect on the credit analysis. The rating remains subject to surveillance and can be upgraded, downgraded, placed under review, confirmed, or discontinued over time.

Mortgage delinquency rates have been rising across much of the U.S. as higher borrowing costs and broader homeownership expenses squeeze household budgets, our earlier coverage noted. The state-by-state data showed the sharpest quarter-on-quarter increases in Vermont, Delaware, and Louisiana, while a few states saw improvements, pointing to uneven regional housing-payment stress that can influence broader credit conditions.

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