DBRS Morningstar Confirms Ratings on WFCM 2019-C53, Removes Three Classes From Under Review with Negative Implications
CMBSDBRS, Inc. (DBRS Morningstar) confirmed its ratings on Commercial Mortgage Pass-Through Certificates, Series 2019-C53 issued by Wells Fargo Commercial Mortgage Trust 2019-C53:
-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class X-A at AAA (sf)
-- Class A-S at AAA (sf)
-- Class B at AAA (sf)
-- Class X-B at AA (low) (sf)
-- Class C at A (high) (sf)
-- Class X-D at A (sf)
-- Class D at A (low) (sf)
-- Class E-RR at BBB (sf)
-- Class F-RR at BBB (low) (sf)
-- Class G-RR at BB (high) (sf)
-- Class H-RR at BB (low) (sf)
-- Class J-RR at B (high) (sf)
-- Class K-RR at B (low) (sf)
Classes H-RR, J-RR, and K-RR were removed from Under Review with Negative Implications, where they were placed on August 20, 2020. All trends are Stable. Although all classes have a Stable trend, there are continued performance challenges for the underlying collateral, many of which have been driven by the impact of the Coronavirus Disease (COVID-19) pandemic. In addition to loans representing 0.8% of the pool being in special servicing as of the October 2020 remittance, DBRS Morningstar also notes that the pool has a moderate concentration of hospitality and retail properties, representing 10.9% and 19.9% of the pool balance, respectively. These property types have been the most severely affected by the initial impact of the coronavirus pandemic and, as such, those concentrations are suggestive of slightly increased risks for the pool, particularly at the lower rating categories, since issuance.
The transaction is concentrated by property type as seven loans, representing 25.3% of the current trust balance, are secured by office assets, whereas 14 loans, representing 19.9% of the current trust balance, are secured by retail assets. Self storage collateral makes up the third-largest concentration, representing eight loans and 11.6% of the current trust balance. According to the October 2020 remittance, there is one loan, representing 0.8% of the current trust balance, in special servicing. The loan is secured by a retail asset: 101 NE 40th Street - FL (Prospectus ID#32; 0.8% of the current trust balance).
101 NE 40th Street - FL is secured by a single-tenant, 5,000-sf retail property in Miami, Florida, and was transferred to the special servicer in September 2020 given the ongoing effects of the coronavirus pandemic. The property’s single tenant, Theory (with a lease that expires in March 2022), stopped paying rent when forced to close as a result of the coronavirus pandemic. As of October, the tenant has resumed paying rent and is in negotiations with the borrower on a possible lease modification to have some of the past due rent abated and the rest paid back over several months. The loan advanced to 121-plus days past due in October. As of October 2020, the servicer reported the workout strategy as dual-tracking foreclosure as it negotiates a possible loan modification with the borrower. At issuance, the collateral for the loan had an appraisal value of $10.5 million, equating to an LTV of 51.4%. DBRS Morningstar believes that while the subject is not immune to the short-term stressors from the pandemic, the property’s long-term outlook could be hampered by the headwinds in the luxury retail industry and declining tourism volume. Given that short-term demand remains suppressed, DBRS Morningstar will continue to monitor the situation for developments.
As of the October 2020 remittance, all 58 original loans remain in the pool. No loans are defeased. Additionally, there are eight loans, representing 10.2% of the current trust balance, on the servicer’s watchlist. These loans are being monitored for a variety of reasons including low debt service coverage ratio (DSCR), occupancy, and deferred maintenance issues; however, the primary reason for many of the more recent transfers is for hospitality properties with a low DSCR stemming from disruptions related to the coronavirus pandemic. At issuance, the pool reported a weighted-average DSCR of 1.97 times (x).
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, and X-D 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 this transaction.
For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com The platform includes loan-level 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.
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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