DBRS Morningstar Confirms All Classes of NYT 2019-NYT Mortgage Trust

DBRS Limited (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass-Through Certificates issued by NYT 2019-NYT Mortgage Trust as follows:

-- Class A at AAA (sf)
-- Class B at AA (high) (sf)
-- Class C at AA (sf)
-- Class X-EXT at A (high) (sf)
-- Class D at A (sf)
-- Class E at BBB (sf)
-- Class F at BB (high) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the underlying property, which remains in line with DBRS Morningstar’s expectations from when ratings were initially assigned. The transaction consists of a $515 million nonrecourse, first-lien mortgage loan backed by the borrower’s leasehold interest in 715,341 square feet (sf) of office space on floors 28 through 50 and 23,044 sf of ground-floor retail space in The New York Times Building, a Class A office building at 620 Eighth Avenue in Manhattan’s Times Square submarket. Floors 2 through 27 are used as the New York Times headquarters and are not collateral for the loan. The subject loan has an initial term of two years and allows for five one-year extension options, the first of which was exercised in December 2020. The loan bears interest at a 1.856796% spread over the one-month Libor, which will increase by 0.25% if the borrower exercises the fourth extension option. There is also a Libor cap of 3.50% to protect against interest rate increases. The transaction includes $120 million of secured subordinate debt and $115 million of unsecured mezzanine debt with spreads of 3.25% and 5.25% over Libor, respectively. The leasehold interest in the collateral is subject to a ground lease that runs through December 11, 2100, with an option to purchase in 2032 for $10.00.

The collateral was 99.2% occupied as of YE2020, and YE2020 net cash flow was unchanged from the prior year. Prominent tenants include ClearBridge Investments (27.2% of net rentable area (NRA), lease expires December 2023) and the law firms Covington & Burling LLP (26.2% of NRA, lease expires September 2027) and Seyfarth Shaw LLP (17.5% of NRA, lease expires February 2024). The retail space generates a relatively small portion of the rent (approximately 3%) and is mostly leased to food-service tenants. Tenant rollover is minimal, with only one tenant, representing 1.0% of NRA scheduled to rollover in the next 12 months.

Forest City Enterprises L.P., which is ultimately owned by Brookfield Property Partners L.P. (rated BBB (low) with a Stable trend by DBRS Morningstar), is the loan sponsor.

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

Class X-EXT is an interest-only (IO) certificate 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.

The DBRS Morningstar Viewpoint platform provides additional information on this transaction and underlying loans including DBRS Morningstar metrics, commentary, servicer-reported cash flows, and other performance-related data.

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 26, 2021), 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].

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