DBRS Morningstar Confirms All Classes of Wells Fargo Commercial Mortgage Trust 2019-C53

DBRS Limited (DBRS Morningstar) confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2019-C53 issued by Wells Fargo Commercial Mortgage Trust 2019-C53 (the Issuer) 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 X-A at AAA (sf)
-- Class A-S at AAA (sf)
-- Class B at AAA (sf)
-- Class X-B at AA (low) (sf)
-- Class C at A (high) (sf)
-- Class X-D at A (sf)
-- Class D at A (low) (sf)
-- Class E-RR at BBB (sf)
-- Class F-RR at BBB (low) (sf)
-- Class G-RR at BB (high) (sf)
-- Class H-RR at BB (low) (sf)
-- Class J-RR at B (high) (sf)
-- Class K-RR at B (low) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction. As of October 2021 remittance, all 58 original loans remain in the pool with a collateral reduction of just 0.7% since issuance from scheduled amortization. One loan, representing 0.8% of the pool, is in special servicing while 18 loans, representing 33.6% of the pool, are on servicer’s watchlist. These loans are being monitored for a variety of reasons including low occupancy, low debt service coverage ratio (DSCR), and deferred maintenance issues.

The largest loan on the servicer’s watchlist being monitored for credit issues is 112-118 West 125th Street (Prospectus ID#6, 4.6% of the pool). The $32.1 million loan is secured by the borrower's fee-simple interest in a 32,000-square-foot retail/office mixed-use property in New York City. The 10-year loan pays full-term interest-only (IO) through its maturity in October 2029. Loan proceeds refinanced existing debt.

The loan was added to the servicer’s watchlist in December 2020 for declining DSCR. Net cash flow (NCF) in 2020 was 32% below the Issuer's underwritten NCF, and the DSCR was 1.30 times. Occupancy was 56% at issuance and has remained at that level to date. The largest tenant is Victoria's Secret representing 44% of the gross leasable area (GLA) with a lease through June 2034, followed by Bath & Body Works at 13% of the GLA through June 2034. Given the tenancy in place, the drop in NCF in 2020 was likely a result of rent breaks given to the tenants amid the Coronavirus Disease (COVID-19) pandemic.

The collateral is in a prominent retail corridor on West 125th Street, in New York’s Uptown market, per Reis. The two retail tenants have shown a long-term commitment to the property, spending a combined $6.5 million on build-out costs and executing leases through 2034 with no early termination options. Despite the lack of leasing momentum, the income from both tenants is more than enough to cover debt service payments. At issuance, the sponsor was in discussions with the Children’s Aid Society to lease all of the remaining vacant space at the property. Lease negotiations appeared to have stalled because the property is still just 56% occupied as of March 2021. DBRS Morningstar has inquired about the status of the lease negotiations, and the servicer responded that there is nothing imminent at the moment. At issuance, the collateral for the loan had an appraised value of $55.6 million, equating to a loan-to-value ratio of 58%.

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 and X-D are 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.

DBRS Morningstar provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loan in the transaction:

-- Prospectus ID#6 – 112-118 West 125th Street (4.6% of the pool)

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].

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577