DBRS Morningstar Confirms Ratings on Citigroup Commercial Mortgage Trust 2019-C7

DBRS, Inc. (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass-Through Certificates, Series 2019-C7 issued by Citigroup Commercial Mortgage Trust 2019-C7:

-- 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-AB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A AAA (sf)
-- Class B at AAA (sf)
-- Class C at A (high) (sf)
-- Class X-B at AAA (sf)
-- Class D at BBB (high) (sf)
-- Class E at BBB (low) (sf)
-- Class X-D at BBB (sf)
-- Class F at BB (high) (sf)
-- Class X-F at BBB (low) (sf)
-- Class G at BB (high) (sf)
-- Class X-G at BBB (low) (sf)
-- Class H at B (high) (sf)
-- Class X-H at BB (low) (sf)
-- Class J-RR at B (low) (sf)

All trends are Stable. However, 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. As of the November 2020 remittance, loans representing 1.3% of the pool were in special servicing. Additionally, DBRS Morningstar notes that the pool has a moderate concentration of hospitality and retail properties, representing 10.0% and 18.8% 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 18 loans, representing 29.8% of the current trust balance, are secured by multifamily assets. According to the November 2020 remittance, there are two loans, representing 1.3% of the current trust balance, in special servicing. Both loans are secured by a hotel assets: Courtyard by Marriott New Haven/Milford (Prospectus ID#41; 0.8% of the current trust balance) and Hampton Inn Cleveland-Westlake (Prospectus ID#48; 0.5% of the current trust balance).

Courtyard by Marriott New Haven/Milford is secured by a 121-key limited-service hotel in Orange, Connecticut, and was transferred to the special servicer in July 2020 given the ongoing effects of the coronavirus pandemic. As of November 2020, the servicer reported that a modification has been agreed upon and is in the process of being finalized. The subject recently received an updated appraisal that reported an August 2020 value of $11.0 million (a -29.0% variance from the issuance value of $15.5 million), implying a current loan-to-value ratio of 87.5%. 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 reduction of corporate demand. At issuance, the hotel had strong corporate demand driven by its proximity to Yale West Campus and the offices for both Avangrid Networks and United Illuminating. Given that short-term demand remains suppressed, DBRS Morningstar will continue to monitor the situation for developments.

As of the November 2020 remittance, all 55 original loans remain in the pool. No loans are defeased. Additionally, there are four loans, representing 12.0% 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 2.0 times.

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 X-F, X-G, and X-H 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 [email protected].

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