DBRS Morningstar Confirms Ratings of BANK 2019-BNK21

DBRS Morningstar (DBRS Limited) confirmed its ratings on the Commercial Mortgage Pass-Through Certificates, Series 2019-BNK21 (the Certificates) issued by BANK 2019-BNK21 as follows:

-- 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 A-5 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 (low) (sf)
-- Class C at A (high) (sf)
-- Class D at A (low) (sf)
-- Class X-D at A (low) (sf)
-- Class E at BBB (high) (sf)
-- Class X-F at BBB (low) (sf)
-- Class F at BB (high) (sf)
-- Class X-G at BB (sf)
-- Class G at BB (low) (sf)

All trends are Stable.

The rating confirmations reflect the overall performance of the transaction, which has remained in line with DBRS Morningstar’s expectations since issuance. At issuance, the transaction consisted of 87 loans secured by commercial and multifamily properties, with an original trust balance of $1.18 billion. As of the September 2021 remittance, there has been a collateral reduction of 0.5% since issuance and all loans remain in the pool. The transaction is concentrated in loans backed by office properties, representing 44.7% of the pool, with the next-largest concentrations in hotel properties, representing 22.4% of the pool, and retail properties, representing 13.9% of the pool. While the Coronavirus Disease (COVID-19) pandemic has disproportionately affected loans secured by hotel and retail properties, the retail loans in the subject transaction have generally performed well. There are five loans, representing 9.1% of the pool, that are secured by hotel properties and are currently on the watchlist related to a decline in performance as a result of the pandemic. However, these loans are current and have generally shown signs of recovery as the overall tourism industry begins to rebound. With this review, DBRS Morningstar analyzed these loans with an elevated probability of default.

As of the September 2021 remittance, there is one loan in special servicing and nine loans on the servicer’s watchlist, representing 0.7% and 27.0% of the pool, respectively. The 4440 East Tropicana Avenue (Prospectus ID#33, 0.7% of the pool) loan is secured by a two-tenant retail building in Las Vegas and transferred to special servicing in September 2020 for monetary default as a result of the pandemic. The largest tenant, 24 Hour Fitness (79.8% of the net rentable area (NRA)), declared bankruptcy and vacated the subject in June 2020. As a result, only one tenant remains at the property, H&P Tires Express, LLC, which represents 20.2% of NRA on a lease through July 2029. The borrower had requested relief related to the pandemic and the servicer is currently reviewing the proposal while also dual tracking foreclosure proceedings. According to the June 2021 appraisal, the property was valued at $6.0 million, which is a 56.5% decrease from the appraised value at issuance of $13.8 million and below the current loan balance of $8.7 million. Given the continued challenges the property is facing to back-fill the dark space amid the pandemic, DBRS Morningstar performed a hypothetical liquidation scenario for the loan, resulting in a loss severity in excess of 55.0%.

Three loans, representing a combined 22.5% of the pool, are shadow-rated investment grade by DBRS Morningstar, including Park Tower at Transbay (Prospectus ID#1, 9.7% of the pool), 230 Park Avenue South (Prospectus ID#2, 9.3% of the pool), and Grand Canal Shoppes (Prospectus ID#10, 3.4% of the pool). The Grand Canal Shoppes loan has several pari passu pieces secured in a number of commercial mortgage backed securities (CMBS) transactions, including three other CMBS transactions rated by DBRS Morningstar (GSMS 2019-GC42, CGCMT 2019-GC41, and BMARK 2019-B12). Various pari passu pieces were placed on servicers’ watchlist because of a trigger event tied to the debt yield falling below the minimum threshold. It is unclear as to why the subject’s pari passu piece was not on the watchlist, but DBRS Morningstar has been monitoring this loan closely as a result of the concerns of the pandemic, particularly its effects on the Las Vegas economy. Local and international tourism are showing signs of recovery and DBRS Morningstar believes the collateral property’s prime location, historically strong performance, relatively low leverage, and tenant mix are significant mitigating factors for the near- to medium-term risks introduced by the pandemic. With this review, DBRS Morningstar confirmed the Park Tower at Transbay, 230 Park Avenue South, and Grand Canal Shoppes loans continue to perform in line with investment-grade loan characteristics.

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, and X-G 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 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.

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 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.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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