DBRS Morningstar Confirms All Classes of BBCMS 2020-BID Mortgage Trust

DBRS, Inc. (DBRS Morningstar) confirmed the ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2020-BID issued by BBCMS 2020-BID Mortgage Trust as follows:

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

All trends are Stable.

The rating confirmations are reflective of the generally stable performance since the October 2020 close date. The servicer reports no delinquencies or other defaults and there have been no Coronavirus Disease (COVID-19)-related relief requests submitted by the borrower.

The underlying mortgage loan for the subject transaction is collateralized by the borrower’s fee-simple interest in a Class A office building in the Upper East Side submarket of Manhattan, New York. The building benefits from the long-term tenancy of Sotheby's, which executed a new 15-year triple net lease with three 10-year extension options in concurrence with the closing of the mortgage loan. In addition to having been at the property since 1980, Sotheby's was also reported to have invested more than $50 million in its space in 2018 and 2019 alone. At closing, DBRS Morningstar noted the subject property is also well positioned to capture space demands in the area in the event that the Sotheby’s space needs change, as the subject is well located in close proximity to a cluster of major medical office space users, including New York-Presbyterian/Weill Cornell Hospital and the Hospital for Special Surgery.

DBRS Morningstar also notes that the property benefits from a substantial floor value based on its desirable location on the Upper East Side. The appraiser's concluded land value was approximately $485 million, or at least $1,100 per square foot, which covers the entire whole loan balance, including the $60 million mezzanine loan, and provides additional downside protection. The transaction also benefits from an upfront interest reserve of approximately $16.7 million, which was funded by the borrower at close.

Despite its long history and prominent position in the global auction industry, Sotheby's raised significant doubt regarding its ability to operate as a going concern in its 2019 annual report and reported a loss of $71.2 million for YE2019. Furthermore, according to published reports, the company’s live and/or online auctions, which accounted for $3.5 billion of its total revenue, were down nearly 30% compared with 2019 while private sales of $1.5 billion were up 50% year over year. The company was taken private in 2019, and updated information on the company’s revenues since then has been limited, but news reports in late 2020 and early 2021 stated that Sotheby’s 2020 sales of $5.0 billion edged out 2019 global sales of $4.8 billion and bested competing auction house Christie’s 2020 sales of $4.4 billion, thanks in part to Sotheby’s more advanced online auction presence.

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-CP and X-EXT 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 DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482/baseline-macroeconomic-scenarios-application-to-credit-ratings.

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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