DBRS Morningstar Confirms Ratings of Citigroup Commercial Mortgage Trust 2019-GC41

DBRS Limited (DBRS Morningstar) confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2019-GC41 issued by Citigroup Commercial Mortgage Trust 2019-GC41 as follows:

-- 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-5 at AAA (sf)
-- Class A-AB at AAA (sf)
-- Class AS at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (high) (sf)
-- Class X-B at AA (low) (sf)
-- Class C at A (high) (sf)
-- Class D at BBB (high) (sf)
-- Class X-D at BBB (high) (sf)
-- Class E at BBB (sf)
-- Class X-F at BBB (low) (sf)
-- Class F at BB (high) (sf)
-- Class G-RR at B (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. This transaction closed in August 2019, with an original trust balance of $1.28 billion. At issuance, the collateral consisted of 43 loans secured by commercial and multifamily properties. As of the July 2020 remittance, all loans remain in the pool with an aggregate principal balance of $1.27 billion, representing a collateral reduction of 0.1% since issuance. At issuance, the transaction had a weighted-average debt service coverage ratio of 2.48 times and a debt yield of 10.0%.

The pool has a smaller concentration of loans secured by retail and lodging properties, which represent 14.3% and 10.2% of the pool, respectively. Additionally, the pool also features four loans, representing a combined 19.0% of the pool, that are shadow-rated investment grade by DBRS Morningstar: 30 Hudson Yards, Grand Canal Shoppes, Moffett Towers II Buildings 3 & 4, and The Centre. With this review, DBRS Morningstar confirmed the loans continue to perform in line with the investment-grade shadow ratings. However, the Grand Canal Shoppes loan is being monitored closely as the Coronavirus Disease (COVID-19) pandemic has been particularly hard on the Las Vegas economy and sales at the property are expected to slump through the near to medium term. Although local and international tourism is down, DBRS Morningstar believes the collateral property’s prime location, historically strong performance, relatively low leverage, and tenant mix are significant mitigating factors for the near- to medium-term risks introduced by the pandemic.

As of the July 2020 remittance, there are two loans in special servicing and eight loans on the servicer’s watchlist, representing 2.1% and 23.6% of the pool, respectively. Six of the eight loans on the servicer’s watchlist are being monitored for coronavirus relief requests, while the remaining two are on the watchlist for other performance-related events. Those loans include Summit Technology Center (Prospectus #11, 4.0% of the pool), which is being monitored for an upcoming lease expiration, and 6265 Gunbarrel Avenue (Prospectus #23, 1.3% of the pool), which is being monitored for revenue decline as a result of free rent periods related to recent lease executions.

Both loans in special servicing recently transferred in June 2020 and were delinquent as of July 2020 reporting. Burbank Collection (representing 1.6% of the pool) is over 60 days delinquent, while Floridian Hotel & Suites (representing 0.6% of the pool) is over 90 days delinquent. These loans were analyzed with elevated probability of default levels with this review to increase the expected loss for each.

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 X-A, X-B, X-D, and X-F 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.

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

-- Prospectus ID #1 - 30 Hudson Yards (7.8% of the pool)
-- Prospectus ID #6 - Grand Canal Shoppes (4.6% of the pool)

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. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The DBRS Morningstar long-term rating scale definition indicates that ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

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