DBRS Morningstar Confirms Ratings on All Classes of FMBT 2019-FBLU, Changes Trends on Four Classes to Stable From Negative

DBRS Limited (DBRS Morningstar) confirmed the ratings of Commercial Mortgage Pass-Through Certificates, Series 2019-FBLU issued by Fountainbleau Miami Beach Trust 2019-FBLU as follows:

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

DBRS Morningstar changed the trends on Classes D, E, F, and G to Stable from Negative. All remaining classes have Stable trends.

The rating confirmations and trend changes reflect the overall improved performance of the collateral as it continues to recover from the effects of the Coronavirus Disease (COVID-19) pandemic. The loan is secured by a four-diamond, 1,594-key luxury resort on the mid-beach area of an oceanfront location in Miami Beach, Florida. The whole loan of $1.75 billion consists of $975.0 million of senior debt held in the trust and $200.0 million of mezzanine debt held outside the trust. The loan is interest only (IO) through its five-year term, maturing in December 2024 with no extension options available.

The loan was transferred to the special servicer in April 2020 following the borrower’s request for pandemic-related relief in the form of a forbearance agreement. The borrower was granted a six-month deferral of monthly furniture, fixture and equipment (FF&E) deposits through year-end (YE) 2020 and the exclusion of 2020 financials when calculating debt yield tests. All deferred amounts were repaid and, according to the June 2022 loan level reserve report, there is $11.3 million held in FF&E reserve. The loan was returned to the master servicer in September 2020.

According to the December 2021 STR report, the collateral reported a trailing 12 months (T-12) ended December 31, 2021, occupancy rate of 65.9%, average daily rate (ADR) of $426.01, and revenue per available room (RevPAR) of $280.74, resulting in a RevPAR penetration rate of 224.3%. This is an improvement from the T-12 ended May 30, 2021, occupancy rate, ADR, and RevPAR of 40.7%, $402.94, and $164.16, respectively, and is generally in line with the issuance occupancy rate of 76.3%, ADR of $375.75, and RevPAR of $272.77. According to the YE2021 financials, the loan reported a net cash flow (NCF) of $90.4 million, which is a substantial improvement from both YE2020, when the loan reported a negative net cash flow, and the DBRS Morningstar NCF at issuance of $77.2 million. The subject’s excellent location along Miami Beach, excellent property quality, and extensive amenity offerings contributed to the property’s ability to rebound from the effects of the pandemic, thereby supporting the trend change to Stable.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

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/396929/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings.

Class X-A is an IO certificate that references 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 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.

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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