DBRS Morningstar Confirms All Classes of BANK 2019-BNK22

DBRS Limited (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass-Through Certificates, Series 2019-BNK22 issued by BANK 2019-BNK22 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-SB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class B at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AA (high) (sf)
-- Class C at AA (sf)
-- Class D at A (sf)
-- Class X-D at A (low) (sf)
-- Class E at BBB (high) (sf)
-- Class X-F at BBB (sf)
-- Class F at BBB (low) (sf)
-- Class X-G at BB (high) (sf)
-- Class G at BB (sf)
-- Class X-H at BB (low) (sf)
-- Class H at B (high) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction. At issuance, the transaction consisted of 58 fixed-rates loans secured by 131 commercial and multifamily properties with an aggregate trust balance of $1.2 billion. According to the June 2021 remittance, all loans remain in the pool and there has been negligible amortization to date. The transaction is concentrated by property type as 10 loans, representing 38.4% of the current trust balance, are secured by office collateral, while the second-largest concentration comprises eight loans, representing 19.1% of the current trust balance, secured by multifamily collateral. There are two loans, representing 2.2% of the current trust balance, in special servicing; however, both loans are performing and will return to the master servicer. There are also 20 loans, representing 29.3% of the current trust balance, on the servicer’s watchlist for cash flow disruption, occupancy fluctuation, failure to submit financials, and/or deferred maintenance.

The largest of the watchlist loans, 230 Park Avenue South (Prospectus ID#2, 9.2% of the current trust balance), was added as a result of an artificially low debt service coverage ratio (DSCR) of 0.63x as of YE2020. The loan is secured by a 374,379-square-foot (sf) office in New York, close to Union Square, and is fully occupied, with the largest tenant being Discovery Communications LLC (96.7% of the net rentable area (NRA)), an investment-grade mass media corporation, which signed a long-term lease expiring January 2037. As part of the leasing agreement, the tenant received a 14- month rent abatement period, which ended in June 2021. With the end of the abatement period, cash flow will likely rise to expected levels over the next year.

The third-largest loan on the servicer’s watchlist, National Anchored Retail Portfolio (Prospectus ID#14, 2.5% of the current trust balance) was initially added to the servicer’s watchlist in August 2020 following missed May and June 2020 loan payments, which the servicer reported were because of Coronavirus Disease (COVID-19)-related hardships. As of October 2020, the special servicer approved the borrower’s relief request and the loan was brought current with reserve tenant improvement/leasing commission reserve funds, which appear to now be empty.

While the loan remains current as of the June 2021 reporting, DBRS Morningstar continues to monitor the loan given the sponsorship provided by Washington Prime Group Inc. (WPG), which announced its Chapter 11 bankruptcy filing June 13, 2021, citing challenges faced during the coronavirus pandemic as contributing to the filing. WPG secured $100 million in debtor-in-possession financing to support daily operations during the bankruptcy proceedings. The filing was likely, as WPG missed an interest payment on its corporate debt in February 2021 and was widely reported to be in discussion with creditors regarding a potential bankruptcy filing since missing the payment. The bankruptcy filing does not include the subject loan’s sponsor entities, so DBRS Morningstar does not expect the property-level debt to be directly affected by this latest development for WPG.

The loan is secured by a five-property anchored retail portfolio spread across three states, including Illinois (48.5% of the allocated loan balance (ALB)), Texas (42.5% of ALB), and Indiana (9.0% of ALB). As of Q1 2020, the portfolio reported an occupancy rate of 91.2%, while the loan was performing at an annualized DSCR of 2.93x, in line with the DBRS Morningstar term figure of 2.95x.

At issuance, DBRS Morningstar shadow rated three loans investment grade, Park Tower at Transbay (Prospectus ID#1, 9.6% of the current trust balance), 230 Park Avenue South, and Midtown Center (Prospectus ID#3, 7.4% of the current pool balance). DBRS Morningstar maintained the shadow ratings on all three loans with this review.

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.

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.

The DBRS 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 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.

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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