DBRS Morningstar Finalizes Provisional Ratings on Citigroup Commercial Mortgage Trust 2019-C7

DBRS, Inc. (DBRS Morningstar) finalized provisional ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2019-C7 issued by the Citigroup Commercial Mortgage Trust 2019-C7:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-AB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A AAA (sf)
-- Class B at AAA (sf)
-- Class C at A (high) (sf)
-- Class X-B at AAA (sf)
-- Class D at BBB (high) (sf)
-- Class E at BBB (low) (sf)
-- Class X-D at BBB (sf)
-- Class F at BB (high) (sf)
-- Class X-F at BBB (low) (sf)
-- Class G at BB (high) (sf)
-- Class X-G at BBB (low) (sf)
-- Class H at B (high) (sf)
-- Class X-H at BB (low) (sf)
-- Class J-RR at B (low) (sf)

All trends are Stable. Classes X-B, X-D, D, E, F, G, H, and J-RR have been privately placed.

The collateral consists of 55 fixed-rate loans secured by 113 commercial and multifamily properties. The transaction has a sequential-pay pass-through structure. DBRS Morningstar analyzed the conduit pool to determine the ratings, reflecting the long-term probability of loan default within the term and its liquidity at maturity. Two loans, representing approximately a combined 8.8% of the pool, have investment-grade shadow ratings from DBRS Morningstar. Based on the cutoff loan balances against the DBRS Morningstar Stabilized Net Cash Flow and their respective actual constants, five loans, representing a combined 5.1% of the pool, had a DBRS Morningstar Term Debt Service Coverage Ratio (DSCR) below 1.32 times (x), a threshold indicative of a higher likelihood of midterm default. The pool additionally includes 16 loans (representing a combined 27.9% of the pool by allocated loan balance) with issuance loan-to-value ratios (LTVs) exceeding 67.1%, a threshold historically indicative of above-average default frequency. The weighted-average (WA) LTV of the pool at issuance is 61.8%, and the pool will amortize down to a WA LTV of 57.6% at maturity.

The collateral features two loans, representing a combined 8.8% of the pool, that have investment-grade shadow ratings from DBRS Morningstar: 650 Madison and 805 3rd Avenue. The 650 Madison loan exhibits credit characteristics consistent with a BBB (low) shadow rating, and 805 3rd Avenue exhibits credit characteristics consistent with a BBB shadow rating.

Of the 55 loans in the pool, the DBRS Morningstar sample included 27 loans, representing a combined 73.6% of the pool by allocated loan balance. Of the loans sampled, 12, representing 55.2% of the sample, have either Average (+) or Above Average property quality. Additionally, only four loans, representing 13.5% of the sampled loans, have Average (-) or Below Average property quality. The properties securing the three largest loans in the pool, all with identical balances representing 4.4% of the pool balance each, are Average (+).

The pool exhibits some leverage barbelling. While the pool has six loans, representing 13.1% of the pool balance, which have an issuance LTV below 59.3%, a threshold historically indicative of relatively low-leverage financing and generally associated with below-average default frequency, there are also 16 loans, representing 27.9% of the pool balance, which have an issuance LTV above 67.1%, a threshold historically indicative of relatively high-leverage financing and generally associated with above-average default frequency. Only two of the identified high-leverage loans exhibit a DBRS Morningstar DSCR of less than 1.32x. These loans exhibited a WA expected loss of 6.8%, which is considerably higher than the WA expected loss of the overall pool. As a result, DBRS Morningstar reflects the risk of these loans in the credit enhancement levels of the pool.

The pool features a relatively high concentration of loans secured by properties in less favorable suburban market areas. Thirty loans, representing 46.9% of the pooled cutoff balance, are secured by properties predominately in areas with a DBRS Morningstar Market Rank of either 3 or 4. The DBRS Morningstar WA DSCR of these loans is still relatively high at 1.87x and the pool also has 13 loans, representing 31.2% of the cutoff pool balance, that are in urban areas with a DBRS Morningstar Market Rank of 7 or 8.

Classes X-A, X-B, X-D X-F, X-G, and X-H are interest-only (IO) certificates that reference a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated applicable reference obligation tranche adjusted upward by one notch if senior in the waterfall.

All ratings are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by DBRS Morningstar.

For supporting data and more information on this transaction, please log into www.viewpoint.dbrs.com.

DBRS Morningstar provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Prospectus ID#1 – 490-504 Myrtle Avenue (4.4% of the pool)
-- Prospectus ID#2 – 650 Madison Avenue (4.4% of the pool)
-- Prospectus ID#3 – 805 3rd Avenue (4.4% of the pool)
-- Prospectus ID#4 – East Village Multifamily Pool 2 (4.0% of the pool)
-- Prospectus ID#5 – 405 E 4th Avenue (3.7%% of the pool)
-- Prospectus ID#6 – Gartner Campus South (3.5%% of the pool)
-- Prospectus ID#7 – Harvey Building Products (3.5%% of the pool)
-- Prospectus ID#8 – Marriott Phoenix Airport (3.5% of the pool)
-- Prospectus ID#9 – Austin Landing Mixed-Use (3.4% of the pool)
-- Prospectus ID#10 – Giant Anchored Portfolio (3.4% of the pool)
-- Prospectus ID#11 – East Village Multifamily Portfolio Pool 1 (3.2% of the pool)
-- Prospectus ID#13 – Park Central Tower (3.1% of the pool)
-- Prospectus ID#14 – Shoppes at Parma (3.1% of the pool)
-- Prospectus ID#15 – Town Center at Sterling (2.9% of the pool)
-- Prospectus ID#16 – Brazilian Court (2.9% of the pool)
-- Prospectus ID#17 – Evergreen at Southwood (2.8% of the pool)
-- Prospectus ID#18 – Memorial West/EAV Portfolio (2.7% of the pool)
-- Prospectus ID#19 – Grand McCarren (2.5% of the pool)
-- Prospectus ID#21 – Sharon Square (2.1% of the pool)
-- Prospectus ID#22 – Sawgrass Village (1.9% of the pool)
-- Prospectus ID#24 – Shops at Central Park (1.7% of the pool)
-- Prospectus ID#28 -- 408 West 130th Street (1.4% of the pool)
-- Prospectus ID#29 – Quail Meadows (1.4% of the pool)
-- Prospectus ID#30 – Hawks Landing Apartments (1.3% of the pool)
-- Prospectus ID#31 – Shadow Lake Apartments (1.2% of the pool)
-- Prospectus ID#39 – TownePlace Suites Weston (0.9% of the pool)
-- Prospectus ID#49 – Vilcom Office (0.5% of the pool)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrs.com. The platform includes issuer and servicer data for most outstanding CMBS transactions (including non-DBRS Morningstar rated), as well as loan-level and transaction-level commentary for most DBRS Morningstar-rated and -monitored transactions.

Notes:
All figures are in U.S. dollars unless otherwise noted.

With regard to due diligence services, DBRS Morningstar was provided with the Form ABS Due Diligence-15E (Form-15E), which contains a description of the information that a third party reviewed in conducting the due diligence services and a summary of the findings and conclusions. While due diligence services outlined in Form-15E do not constitute part of DBRS Morningstar’s methodology, DBRS Morningstar used the data file outlined in the independent accountant’s report in its analysis to determine the ratings referenced herein.

The principal methodology is North American CMBS Multi-borrower Rating Methodology, which can be found on www.dbrs.com under Methodologies & Criteria. For a list of the structured-finance-related methodologies that may be used during the rating process, please see the DBRS Morningstar Global Structured Finance Related Methodologies document, which can be found on www.dbrs.com in the Commentary tab under Regulatory Affairs. Please note that not every related methodology listed under a principal structured finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

The full report providing additional analytical detail is available by clicking on the link under Related Documents or by contacting us at [email protected].

For more information on this credit or on this industry, visit www.dbrs.com or contact us at [email protected].

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