DBRS Morningstar Confirms All Classes of Benchmark 2019-B15 Mortgage Trust

DBRS Limited (DBRS Morningstar) confirmed the following classes of Commercial Mortgage Pass-Through Certificates, Series 2019-B15 issued by Benchmark 2019-B15 Mortgage Trust:

-- 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-5 at AAA (sf)
-- Class A-AB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class D at BBB (high) (sf)
-- Class X-D at BBB (sf)
-- Class E at BBB (low) (sf)
-- Class X-F at BB (sf)
-- Class F at BB (low) (sf)
-- Class G-RR at B (high) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance, when the transaction consisted of 32 fixed-rate loans secured by 87 commercial and multifamily properties. The initial trust balance of $846.6 million has been reduced by only a nominal amount as of the October 2021 remittance, as all loans from issuance remain in the pool and there has been negligible amortization to date. The transaction is concentrated by property type as eight loans, representing approximately 37.0% of the current trust balance, are secured by office collateral; mixed-use properties back the second-largest concentration of loans, with eight loans representing approximately 30.0% of the current trust balance. As of the October 2021 remittance, four loans, representing 12.1% of the pool, are on the servicer’s watchlist, and there is one loan, representing 2.3% of the pool, in special servicing.

The largest loan in special servicing is Hilton Cincinnati Netherland Plaza (Prospectus ID#18, 2.3% of pool), which transferred to special servicing in February 2021 because of imminent monetary default as a result of disruptions from the Coronavirus Disease (COVID-19) pandemic. The $72.4 million whole loan, $19.5 million of which is held in the subject transaction, is secured by a 561-key full-service hotel in Cincinnati. The loan was previously reported up to 60 days to 89 days delinquent throughout 2021; however, the loan was made current as of its August 2021 payment and has been current since. The special servicer and the borrower continue to negotiate the terms of the loan workout.

At issuance, the collateral was valued at $105.0 million, and the servicer obtained an updated value dated April 2021, which showed a relatively moderate decline to $86.0 million. As of a July 2021 STR, Inc. (STR) report, the property reported occupancy rate, average daily rate, and revenue per available room figures of 49.0%, $140.19, and $68.74, respectively, for the trailing three months (T-3) ended July 31, 2021. The property’s website showed room rates near $200 per night for near-term bookings as of an October 2021 search conducted by DBRS Morningstar, suggesting that demand has improved since the July 2021 STR report. For the T-7 period ended July 31, 2021, the servicer reported a debt service coverage ratio (DSCR) of 0.06 times (x), an improvement from the YE2020 DSCR of -0.70x, but cash flows remain well below the issuance figures. These trends are generally in line with reported figures for similarly positioned hotels in the DBRS Morningstar-rated universe, and DBRS Morningstar notes mitigating factors in the borrower’s equity contribution to bring the loan current and the April 2021 value that suggests the as-is value remained north of the senior debt balance on the property.

The largest loan on the servicer’s watchlist is Kildeer Village Square (Prospectus ID#6, 5.7% of pool), which was flagged for delinquent debt service payments for some periods between April 2020 and March 2021, when it was marked as current, and it has remained current since. The $47.9 million 10-year interest-only loan with $9.0 million in mezzanine debt at issuance is secured by a 199,245-square-foot shopping center in Kildeer, Illinois, approximately 40 miles northwest of Chicago. Following the March 2020 departure of the former largest tenant, Art Van Furniture (20.4% of the net rentable area (NRA)), cash flows declined and the DSCR fell, first to 1.47x at YE2020 and again to 1.11x for the T-6 period ended June 30, 2021. The Art Van Furniture closure prompted a cash flow sweep, and, as of the October 2021 reserve report, the lockbox reported a reserve balance of $104,300.

As of the June 2021 rent roll, the subject was 78.4% occupied, with the largest tenants being Nordstrom Rack (16.6% of the NRA, lease expiration in April 2027), Sierra (10.8% of the NRA, lease expiration in May 2027), and Nike (8.6% of the NRA, lease expiration in January 2028). The servicer has noted ongoing negotiations with a fitness tenant to backfill the former Art Van Furniture space as well as several other letters of intent from prospective tenants. The property is relatively new and modern and is an attractive development that should fare better than other spaces in the area trying to backfill vacant boxes, with a superior location along a heavily travelled thoroughfare within a middle- to upper-middle-class area within Chicago’s northwest suburbs.

At issuance, DBRS Morningstar shadow-rated Century Plaza Towers (Prospectus ID#3, 7.4% of pool) at A (sf), The Essex (Prospectus ID#14, 2.9% of pool) at BBB (high) (sf), and Osborn Triangle (Prospectus ID#16, 2.4% of pool) at BBB (low) (sf). DBRS Morningstar confirmed the shadow rating on all three loans given the continued stable performance since issuance.

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, and X-F 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 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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