DBRS Morningstar Confirms Ratings on All Classes of CSMC 2019-ICE4

DBRS Limited (DBRS Morningstar) confirmed all classes of Commercial Mortgage Pass-Through Certificates, Series 2019-ICE4 issued by CSMC 2019-ICE4 as follows:

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

All trends are Stable. The rating confirmations reflect the overall stable performance of the underlying collateral, which remains in line with DBRS Morningstar’s expectations.

The collateral for the $2.35 billion first-lien mortgaged loan includes 64 industrial cold storage and distribution facilities in 22 states, primarily California (23.8% of the pool balance), Washington (14.0% of the pool balance), and Texas (13.3% of the pool balance). There is more than 17.7 million square feet (sf) of storage space, of which 14.1 million sf is temperature-controlled space. The interest-only mortgage loan features a two-year initial term with three 12-month extensions and a fully extended maturity date in May 2024. Property releases are permitted with certain prepayment conditions. The bond payments follow a partial pro rata/sequential-pay structure, such that if properties are released, the first 20% of the principal balance will be paid pro rata among the classes of certificates.

At issuance, 60 of the properties were master leased by Lineage Logistics, LLC, an affiliate of the borrower, Lineage Logistics Holdings, LLC (Lineage), with the remaining four properties master leased to Southeast Frozen Foods Company, L.P. (SEFF). In May 2021, Lineage assumed all operations for SEFF because of the company’s performance difficulties. The takeover included an amendment to the Lineage master lease to include the remaining four properties from SEFF. The rental rate was reset to the market level, and the SEFF master lease was terminated.

The subject loan is on the servicer’s watchlist pending the upcoming May 2022 scheduled maturity and items of deferred maintenance. The servicer has confirmed receipt of the sponsor’s notice to exercise the loan’s second available, one-year extension option, which will extend the loan’s maturity date to May 2023; this request is currently being processed by the servicer. In the event the extension is not executed, a cash flow sweep will be triggered. DBRS Morningstar does not consider deferred maintenance noted at five properties in 2021 to be a credit risk to the trust as they are minor and not material to property operations.

The YE2021 reported net cash flow (NCF) of $233.1 million represents a 2.6% improvement over the YE2020 NCF of $227.3 million and the DBRS Morningstar NCF derived at issuance of $226.6 million. The $39.1 million (9.3%) increase in overall operating expenses compared with the DBRS Morningstar issuance figures has been offset by a $45.5 (7.0%) increase in effective gross income, resulting in an overall stable expense ratio for the underlying properties. The portfolio reported an occupancy of 100% as of YE2021.

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.

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 this transaction.

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com. The platform includes loan-level 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 4, 2022), 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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