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 DBRS Morningstar’s stable performance expectations, which remain unchanged since issuance. The portfolio’s performance has continued to restabilize following a dip in occupancy and cash flows, which troughed in 2020. As of Q3 2022, both occupancy and cash flow are generally in line with DBRS Morningstar’s issuance expectations.

The trust is secured by 18 separate nonrecourse, first-lien mortgage loans totaling $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 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 at the time of loan closing. The properties have potential for additional revenue bumps if rent-restricted units are legally vacated and converted into market-rate units. The loans, which are not cross-collateralized or cross-defaulted, all have five-year, interest-only (IO) loan terms and are scheduled to mature in January 2024. 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 2023, there are 11 loans, representing 58.4% of the current trust, on the servicer’s watchlist mainly because of low debt service coverage ratios (DSCR) and the initiation of cash traps. Many of the loans being monitored for low DSCR were initially added in 2020 or 2021 and have since reported improvements in performance. The weighted-average net-cash-flow improvement for loans on the servicer’s watchlist was 17.6% from YE2021. For the portfolio as a whole, financial reporting for the trailing 12 months ended September 30, 2022, indicates the combined portfolio cash flow increased 10.2% over the YE2021 figures to $10.4 million, which is relatively in line with the DBRS Morningstar net cash flow of $10.8 million. As of September 2022, the portfolio’s weighted average occupancy was 90.7%, compared with 96.3% at YE2021 and 78.9% at YE2020, with individual property occupancies ranging from 55.0% to 100.0%. A-note DSCRs remain healthy, with the portfolio reporting a weighted average A-note DSCR of 2.17 times (x). DBRS Morningstar anticipates the portfolio will continue to perform in line with issuance expectations through to its maturity in 2024.

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).

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 (May 17, 2022).

Classes X-A and X-B 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.

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

The principal methodology is the North American CMBS Surveillance Methodology (March 16, 2023; https://www.dbrsmorningstar.com/research/410912/north-american-cmbs-surveillance-methodology).

Other methodologies referenced in this transaction are listed at the end of this press release.

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 rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the rating process for this rating action.

DBRS Morningstar had access to the accounts, management and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

This is a solicited credit rating.

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
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Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577

North American Single-Asset/Single-Borrower Ratings Methodology (February 23, 2023),
https://www.dbrsmorningstar.com/research/410191

Rating North American CMBS Interest-Only Certificates (December 19, 2022), https://www.dbrsmorningstar.com/research/407577

DBRS Morningstar North American Commercial Real Estate Property Analysis Criteria (September 12, 2022),
https://www.dbrsmorningstar.com/research/402646

North American Commercial Mortgage Servicer Rankings (September 8, 2022),
https://www.dbrsmorningstar.com/research/402499

Interest Rate Stresses for U.S. Structured Finance Transactions (August 30, 2022),
https://www.dbrsmorningstar.com/research/402153

Legal Criteria for U.S. Structured Finance (December 7, 2022),
https://www.dbrsmorningstar.com/research/407008

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].