DBRS Morningstar Confirms Ratings on All Classes of BANK 2019-BNK21

DBRS Limited (DBRS Morningstar) confirmed the following ratings on the Commercial Mortgage Pass-Through Certificates, Series 2019-BNK21 issued by BANK 2019-BNK21:

-- Class A-SB at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-5 at AAA (sf)
-- Class A-S at AAA (sf)
-- Class B at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AA (low) (sf)
-- Class C at A (high) (sf)
-- Class D at A (low) (sf)
-- Class X-D at A (low) (sf)
-- Class E at BBB (high) (sf)
-- Class X-F at BBB (low) (sf)
-- Class F at BB (high) (sf)
-- Class X-G at BB (sf)
-- Class G at BB (low) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction given the small concentration of loans on the servicer’s watchlist and no special serviced or delinquent loans as of the most recent remittance. Cash flows have generally remained stable and are in line with issuance expectations as evidenced by the pool’s weighted-average debt service coverage ratio (DSCR) of 2.76 times (x).

As of the August 2023 remittance, 47 of the original 49 loans remain in the pool, with an aggregate principal balance of $1.1 billion, reflecting a collateral reduction of 4.6% since issuance. Two loans, representing 8.7% of the current pool balance, are fully defeased. There are six loans, representing 6.9% of the pool balance, on the servicer’s watchlist. Only two loans, representing 1.8% of the pool, are being monitored for DSCRs, while the remaining loans are being monitored for deferred maintenance or lack of financials provided.

In terms of property concentration, the number of loans backed by office properties represents 38.6% of the pool, including five of the top 10 largest loans. In general, the office sector has been stressed recently. However, given the trust’s exposure to this property type, these loans are generally performing as expected and, in several cases, benefit from stable long-term tenancy from investment-grade-rated tenants. All five office loans within the top 10 largest loans of the pool boast DSCRs above 2.00x, and four of the five report occupancy rates above 90.0%.

All office loans have reported stable year-over-year occupancy rates, with the exception of the Tower at Burbank loan (Prospectus ID#5, 6.2% of the pool), which is secured by an office property in Burbank, California. Per the March 2023 rent roll, the property was 77.2% occupied, largely as a result of the departure of WeWork, which previously occupied 15.2% of net rentable area (NRA) and vacated ahead of its lease expiry in Q4 2022. According to documents provided at issuance, the WeWork lease included both a guarantee from its parent company as well as a significant security deposit. The loan had previously performed in line with issuance expectations, most recently reporting a DSCR of 2.88x as of YE2022. Following WeWork’s departure, however, DSCR could fall to approximately 2.55x, in absence of any additional leasing activity. DBRS Morningstar analyzed this loan using a stressed loan-to-value ratio, resulting in an expected loss that was more than double the pool average.

There are three loans, representing 23.5% of the pool balance, that are shadow-rated investment grade. These loans include the two largest loans in the pool, Park Tower at Transbay (Prospectus ID#1, 10.2% of the pool) and 230 Park Avenue South (Prospectus ID#2, 9.8% of the pool), which are backed by office properties leased to investment-grade-rated tenants. Park Tower at Transbay is fully leased to Meta Platforms through 2033 and is in the central business district of San Francisco. Although Meta has listed its entire 435,000-square-foot space at the nearby 181 Fremont property for sublease, the tenant has not given any indication of subleasing at subject property and continues to occupy this space. Based on the YE2022 financials, the loan reported a healthy DSCR of 3.01x. The 230 Park Avenue South property is in Manhattan and is nearly fully leased to Discovery Communications. The tenant occupies 95.3% of NRA on a lease through January 2037, eight years beyond the loan term. Based on the YE2022 financials, the loan reported a DSCR of 2.17x. The above-mentioned loans, along with the Grand Canal Shoppes loan (Prospectus ID#10, 3.6% of the pool) continue to be shadow-rated by DBRS Morningstar as the loan performance trends remain consistent with investment-grade loan characteristics.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factor(s) 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 (July 4, 2023) https://www.dbrsmorningstar.com/research/416784.

Classes X-A, X-B, X-D, X-F, and X-G 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 credit ratings are subject to surveillance, which could result in credit 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 (March 16, 2023; https://www.dbrsmorningstar.com/research/410912).

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 credit rating was initiated at the request of the rated entity.

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

This is a solicited credit rating.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

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

The credit rating methodologies used in the analysis of this transaction can be found at: https://www.dbrsmorningstar.com/about/methodologies.

North American CMBS Multi-Borrower Rating Methodology (March 16, 2023)/North American CMBS Insight Model v 1.1.0.0 (https://www.dbrsmorningstar.com/research/410913)

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 (August 23, 2023; https://www.dbrsmorningstar.com/research/419592)

Interest Rate Stresses for U.S. Structured Finance Transactions (June 9, 2023; https://www.dbrsmorningstar.com/research/415687)

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

A description of how DBRS Morningstar analyzes structured finance transactions and how the methodologies are collectively applied can be found at: https://www.dbrsmorningstar.com/research/417279.

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