DBRS Morningstar Confirms Ratings on All Classes of Citigroup Commercial Mortgage Trust 2020-555

DBRS Limited (DBRS Morningstar) confirmed its ratings on all classes of the Commercial Mortgage Pass-Through Certificates, Series 2020-555 issued by Citigroup Commercial Mortgage Trust 2020-555 as follows:

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

All trends are Stable.

The rating confirmations reflect the overall stable performance of the collateral, which remains in line with DBRS Morningstar’s expectations at issuance.

The loan is secured by the borrower’s leasehold interest in 555 10th Avenue, a Class A luxury high-rise apartment in the Midtown West submarket of Manhattan, New York. The property consists of 598 apartment units, of which 150 are affordable housing under section 421-A; a charter school occupying nearly 110,000 square feet across eight floors; and ground-floor retail. The property features a rooftop terrace, two fitness centers, a yoga studio, and a bowling alley, among other high-end amenities. Units feature luxurious finishes, including oversized windows, quartz countertops, and stainless-steel appliances. The building sits just north of the Hudson Yards development, with good proximity to the Port Authority Bus Terminal and multiple subway lines.

The total financing package consists of a $400.0 million mortgage loan and a nontrust mezzanine loan of $140.0 million. The trust collateral consists of a $213.4 million senior trust note and a $136.6 million junior trust note. In addition, there is $50.0 million of senior companion loan notes, which are pari passu with GSMS 2020-GC47 (not rated by DBRS Morningstar). The 10-year loan matures in December 2029 and pays interest only (IO) at a fixed rate of 3.52% for its entire term. The mezzanine loan has an interest rate of 5.60% with IO payments and a maturity date that is co-terminous with the mortgage loan.

As of the November 2022 rent roll, the subject's market-rent units were 91.8% occupied and the rent-stabilized units were 97.5% occupied with average monthly rental rates of $5,737 per unit and $1,183 per unit, respectively; relatively in line with DBRS Morningstar’s concluded monthly rental rates at issuance of $5,925 per unit and $1,127 per unit. In addition, the commercial space remains 100% occupied with an average rental rate of $34.25 per square foot. According to the trailing nine month period ended September 30, 2022, the loan reported a debt service coverage ratio (DSCR) of 1.77 times (x), compared with the YE2021 DSCR of 1.53x and DBRS Morningstar DSCR at issuance of 1.76x. The collateral continues to benefit from strong submarket fundamentals with Reis reporting the Q3 2022 Midtown West submarket multifamily vacancy and average effective rental rate at 5.1% and $5,260 per unit, respectively. Vacancy rates within the Midtown West submarket are expected to remain less than 5.0% through to 2027.

ENVIRONMENTAL, SOCIAL, AND 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 (May 17, 2022).

Class X 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.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is North American CMBS Surveillance Methodology (October 3, 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].

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