DBRS Morningstar Places All Classes of Sutherland Commercial Mortgage Trust 2019-SBC8 Under Review with Negative Implications

DBRS Limited (DBRS Morningstar) placed all classes of the Commercial Mortgage Pass-Through Certificates, Series 2019-SBC8 issued by Sutherland Commercial Mortgage Trust 2019-SBC8 Under Review with Negative Implications as follows:

-- Class A at AAA (sf), Under Review with Negative Implications
-- Class B at AA (sf), Under Review with Negative Implications
-- Class C at A (low) (sf), Under Review with Negative Implications
-- Class D at BBB (low) (sf), Under Review with Negative Implications
-- Class E at BB (high) (sf), Under Review with Negative Implications
-- Class F at BB (sf), Under Review with Negative Implications
-- Class G at B (sf), Under Review with Negative Implications

There are no trends for these rating actions.

DBRS Morningstar took these rating actions as a result of concerns surrounding the recent rise in the cumulative delinquency rate, which was reported at 26.0% per the May 2020 remittance, an increase from 3.2% in April 2020. DBRS Morningstar deems these actions appropriate amid the uncertainty of the Coronavirus Disease (COVID-19) pandemic and the potential impact on loan performance and the resultant effect on future credit support.

The transaction is composed of individual fixed- and floating-rate small balance loans secured by commercial and multifamily properties with an average loan balance of approximately $240,000. As of the May 2020 remittance, 1,064 of the original 1,223 loans remain in the pool, with an aggregate principal balance of $253.9 million, representing a collateral reduction of 16.6% since issuance. At issuance, the pool had a high concentration of properties located across the states of New York (43.0% of the pool balance), California (18.7% of the pool balance), and Massachusetts (8.1% of the pool balance); however, the pool was otherwise geographically diverse, with an average DBRS Morningstar Market Rank of 4.9. By property type, the pool had concentrations of loans secured by Mixed Use (41.0% of the pool balance), Multifamily (27.7% of the pool balance), and Unanchored Retail (16.7% of the pool balance) properties. The pool benefits from a high percentage of well-located properties, in addition to loans that initially had low leverage and were fully amortizing. However, DBRS Morningstar received limited borrower and property-level information at issuance, and considered the property quality to be Average-/Below Average based on the those properties sampled; this sample comprised 35.0% of the pool balance.

The transaction is configured with a modified pro rata pay pass-through structure.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

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

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

The principal methodology is the North American CMBS Surveillance Methodology (March 6, 2020), which can be found on dbrsmorningstar.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 dbrsmorningstar.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.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info@dbrsmorningstar.com.

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.

These ratings are Under Review with Negative Implications. Generally, the conditions that lead to the assignment of reviews are resolved within a 90-day period.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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