DBRS Morningstar Confirms All Classes of J.P. Morgan Chase Commercial Mortgage Securities Trust 2019-ICON

DBRS Limited (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass-Through Certificates, Series 2019-ICON issued by J.P. Morgan Chase Commercial Mortgage Securities Trust 2019-ICON as follows:

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

All trends are Stable.

The rating confirmations reflect the overall stable performance since issuance and slight performance increase over the prior year due to occupancy increases across the entire portfolio. The trust is secured by 18 separate nonrecourse, first-lien mortgage loans totalling $174.7 million, including 10 multifamily properties and eight mixed-use properties with 352 residential and 17 commercial units in Manhattan and Brooklyn, New York.

The trust consists of $60.7 million of Trust A Notes, which are pari passu with companion notes, and $83.9 million of Trust B Notes. Additionally, $30.0 million of companion notes were securitized in the JPMCC 2019-COR5 transaction (not rated by DBRS Morningstar). The sponsor gradually acquired the 18-property portfolio at a total cost of $160.5 million and invested an additional $55.6 million in capital improvements for a total cost basis of $216.0 million. The properties have potential for additional revenue bumps if rent-restricted units are legally vacated and converted into market-rate units. All loans have five-year, interest-only (IO) loan terms and are not cross-collateralized or cross-defaulted. Each borrower is a special-purpose entity sponsored by Icon Realty Management, LLC, a real estate investment and management firm headquartered in New York.

As of April 2022, there were 15 loans, representing 73.0% of the current trust, on the servicer’s watchlist because of low occupancy and debt service coverage ratio (DSCR) remaining below the required threshold. Although more than 70.0% of the pool is being monitored on the watchlist, performance across the portfolio has increased considerably year over year, with aggregate portfolio cash flows increasing 30.3% in 2021 and average occupancy reported at 95.3% at YE2021 compared with 76.7% at YE2020. As of the YE2021 reporting, all but five of the 18 loans reported YE2021 DSCRs above breakeven, with a weighted average of 1.05 times. While the pandemic stressed the collateral’s performance in 2020, DBRS Morningstar believes that demand will return in the medium term and that the portfolio will return to near-issuance performance levels by loan maturity in 2024.

The 808 Lexington Avenue loan (Prospectus ID#7, 5.3% of the current pool) is secured by a mixed-use property in Manhattan’s Upper East Side near the southeast corner of Central Park. The loan had previously transferred to special servicing in April 2021 for payment default and was returned to the master servicer in October 2021 after the borrower brought the loan current. The commercial unit belonging to a former tenant, Fig & Olive (formerly 32.0% of net rentable area (NRA)), remains vacant. Both residential units are occupied at a monthly rate of $5,000, and the property’s other retail tenant, Manhattan Laser Spa (23.5% of NRA), has a lease expiration in August 2027. The property was 68.0% occupied at YE2021, and the DSCR will remain below breakeven until the vacant retail unit is leased.

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 and X-B 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 this transaction.

The DBRS Viewpoint platform provides additional information on this transaction and underlying loan 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.

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.

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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