DBRS Morningstar Confirms Ratings on All Classes of Benchmark 2019-B12 Commercial Mortgage Trust

DBRS Limited (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass-Through Certificates (the Certificates), Series 2019-B12 issued by Benchmark 2019-B12 Commercial Mortgage Trust as follows:

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

DBRS Morningstar changed the trends on Classes F-RR and G-RR to Stable from Negative. All other trends remain Stable.

The trend changes primarily reflect the generally low losses anticipated upon the resolution of the two loans in special servicing, representing 1.5% of the pool combined, as of the August 2022 reporting. These loans are Greenleaf at Howell (Prospectus ID#34, 0.9% of the pool) and Hampton Inn Terre Haute (Prospectus ID#38, 0.7% of the pool). The analysis for this review considered liquidation scenarios based on stresses on the most recent property valuations for each, with those scenarios suggesting realized losses would combine for less than $8.0 million, which would be well contained with the $34.5 million first loss piece. The rating confirmations and Stable trends reflect the overall performance of the pool and improving performance of the underlying collateral as pressure from the initial phases of the Coronavirus Disease (COVID-19) pandemic continues to ease.

As of the August 2022 remittance, 45 of the original 47 loans remained in the trust with an aggregate principal balance of $1.15 billion, reflecting a collateral reduction of 2.7% since issuance as a result of loan repayment and scheduled loan amortization. At issuance, DBRS Morningstar assigned an investment-grade shadow rating on 3 Columbus Circle (Prospectus ID#8, 4.3% of the pool). With this review, DBRS Morningstar confirms that the performance of this loan remains consistent with investment-grade characteristics.

While there are 19 loans (36.5% of the pool) on the servicer’s watchlist for a variety of reasons, including cash flow declines, occupancy concerns, and deferred maintenance, many of these loans are being monitored following pandemic-related forbearance requests and are beginning to show signs of recovery. Nine of the loans (18.1% of the pool) on the watchlist are secured by retail or hotel properties, which were the most acutely affected by the pandemic. Five loans (4.7% of the pool) on the watchlist are secured by office properties, three of which, Oakbrook Terrace (Prospectus ID#20, 1.6% of the pool), Lakeside Plaza (Prospectus ID#30, 1.2% of the pool), and Houston Building (Prospectus ID#41, 0.5% of the pool), have reported cash flow declines in excess of 30% since issuance as a result of recent declines in occupancy.

The largest loan on the watchlist is Woodlands Mall (Prospectus ID#2, 6.6% of the pool), which is secured by a super-regional mall in the Houston metro area. The loan is on the watchlist for a trigger event related to a debt service coverage ratio (DSCR) decline that was driven by lower revenues reported for 2020 and 2021. As of Q1 2022 reporting, occupancy remains stable at 95.1%, and the loan reported a trailing three-month ended March 31, 2022, DSCR of 2.21 times (x).

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/373262.

Classes X-A, X-B and X-D 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.

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 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.

DBRS Morningstar notes that this press release was amended on September 7, 2023, to reflect the correct status of the Greenleaf at Howell (Prospectus ID#34). DBRS Morningstar also clarified the rating rationale for the trend changes on Classes F-RR and G-RR to Stable from Negative, as noted above.

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 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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