DBRS Morningstar Confirms All Classes of TRTX 2019-FL3 Issuer, Ltd.

DBRS, Inc. (DBRS Morningstar) confirmed the ratings on the following classes of notes issued by TRTX 2019-FL3 Issuer, Ltd. (the Issuer):

-- Class A at AAA (sf)
-- Class A-S at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class D at BBB (high) (sf)
-- Class E at BBB (low) (sf)
-- Class F at BB (low) (sf)
-- Class G at B (low) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the collateral since issuance. The transaction benefits from its pool composition as only two properties, representing 10.9% of the cut-off pool balance, are backed by hospitality properties, which are vulnerable to prolonged depressed cash flows amid the current economic environment stemming from the Coronavirus Disease (COVID-19) pandemic restrictions. In addition, 10 loans, representing 51.0% of the cut-off pool balance, are secured by properties in areas with a DBRS Morningstar Market Rank of 6, 7, or 8, which are characterized as urban locations, which have historically benefitted from greater demand drivers and available liquidity.

In its analysis of the transaction, DBRS Morningstar applied probability of default (POD) adjustments to loans with confirmed issues related to the stressed real estate environment caused by the coronavirus pandemic. Because of the transitional nature of the underlying collateral, proposed business plans that are necessary to bring the assets to stabilization may be delayed and, in some cases, borrowers have requested relief from the Issuer.

The initial collateral consisted of 22 floating-rate mortgage loans secured by 98 mostly transitional real estate properties with a cut-off pool balance totaling more than $1.23 billion, excluding approximately $231.8 million of future funding commitments. Most properties securing the loans are in a period of transition with plans to stabilize and improve the assets’ cash flows and values. During the reinvestment period, the Issuer may acquire funded reinvestment collateral interests and additional eligible loans subject to the eligibility criteria. Per the September 2020 remittance, the trust comprises 21 loans with a current principal balance of $1.23 billion. Since issuance, two loans—the $108.6 million 300 Lafayette loan and the $35.9 million 1525 Wilson loan—were added to the pool during the reinvestment period. The reinvestment period expires in October 2021, at which point the transaction will pay sequentially.

As of the September 2020 remittance, three loans, representing 17.1% of the cut-off pool balance, are on the servicer’s watchlist with no loans in special servicing. All three loans are current and are being monitored on the servicer’s watchlist for upcoming maturity. To date, three loans, including the pool’s two hospitality loans—Westin Charlotte (Prospectus ID#5; 5.7% of the pool) and Hilton Garden Inn Mountain View (Prospectus ID#11; 4.9% of the pool)—have received some form of loan modification or forbearance because the current pandemic has significantly affected the lodging sector. As a result, the sponsor may face additional headwinds in the execution of its stated business plans. In addition to the hotel loans, the 500 Station Boulevard loan (Prospectus ID#10; 5.0% of the pool), which is backed by a multifamily property in Aurora, Illinois, received a modification. Both the Hilton Garden Inn Mountain View and 500 Station Boulevard loans received forbearances allowing the borrower to defer interest payments for between three months and six months while the Westin Charlotte loan was modified to waive the loan-to-value ratio and debt yield tests for both the second and third extension options. DBRS Morningstar analyzed these loans with elevated PODs to account for the increased credit risk. For additional information on these loans, please see the respective loan commentaries on the DBRS Viewpoint platform.

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.

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

-- Prospectus ID#1 – Florida Multifamily Collection (8.9% of the pool)
-- Prospectus ID#2 – Lenox Park Portfolio (7.3% of the pool)
-- Prospectus ID#3 – Kirby Collection (6.5% of the pool)
-- Prospectus ID#5 – Westin Charlotte (5.7% of the pool)
-- Prospectus ID#10 – 500 Station Boulevard (5.0% of the pool)
-- Prospectus ID#11 – Hilton Garden Inn Mountain View (4.9% 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 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 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].

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