DBRS Morningstar Confirms Ratings on FREMF 2019-K735 Mortgage Trust, Series 2019-K735

DBRS Limited (DBRS Morningstar) confirmed the ratings on the Multifamily Mortgage Pass-Through Certificates, Series 2019-K735 issued by FREMF 2019-K735 Mortgage Trust, Series 2019-K735 as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class X1 at AAA (sf)
-- Class X2-A at AAA (sf)
-- Class XAM at AAA (sf)
-- Class A-M at AA (high) (sf)
-- Class B at A (sf)
-- Class X2-B at A (low) (sf)
-- Class C at BBB (high) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction, which has remained in line with DBRS Morningstar’s expectations since issuance. The transaction closed in July 2019, with an original trust balance of $1.4 billion. At issuance, the collateral consisted of 49 loans secured by multifamily and student housing properties. As of the June 2020 remittance, all loans remain in the pool with an aggregate principal balance of $1.4 billion, representing a collateral reduction of 0.1% since issuance. At issuance, the transaction had a weighted-average debt service coverage ratio (DSCR) of 1.43 times (x) and a debt yield of 7.5%.

As of the June 2020 remittance, there are no loans in special servicing, and five loans, representing 6.1% of the pool, are being monitored on the servicer’s watchlist. The largest loan on the watchlist, Spring Forest (Prospectus ID#15, 2.4% of the current pool), is being monitored for deferred maintenance, while three loans collectively representing 2.9% of the pool, Melrose On The Bay (Prospectus ID#18), Timber Creek Apartments (Prospectus ID#45), and Across The Street Apartments (Prospectus ID#49), are being monitored for low DSCRs. The remaining loan, Buena Vida on Palms (Prospectus ID#39, 0.9% of the pool), was recently approved for a three-month forbearance in response to the sponsor’s relief request as a result of the Coronavirus Disease (COVID-19) pandemic.

The Buena Vida on Palms loan is the only loan on the watchlist for a coronavirus-related relief request. At the start of the pandemic, Freddie Mac announced multifamily borrowers showing financial hardships as a consequence of coronavirus would be eligible for a 90-day forbearance of the monthly payments due, as long as the borrower agreed to suspend evictions for tenants affected by the pandemic and agreed to repay the unpaid payments over the 12-month period following the end of the forbearance period. If a relief request is submitted, the master servicers for the Freddie Mac K-series transactions such as the subject will place the loan on the servicer’s watchlist through the term of the forbearance.

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.

Classes X1, X2-A, X2-B, and XAM 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 complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.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.

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 [email protected].

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.

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

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577