DBRS Morningstar Confirms Ratings on All Classes of Wells Fargo Commercial Mortgage Trust 2019-C53

DBRS Limited (DBRS Morningstar) confirmed the ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2019-C53 issued by Wells Fargo Commercial Mortgage Trust 2019-C53 as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class X-A at AAA (sf)
-- Class A-S at AAA (sf)
-- Class B at AAA (sf)
-- Class X-B at AA (low) (sf)
-- Class C at A (high) (sf)
-- Class X-D at A (sf)
-- Class D at A (low) (sf)
-- Class E-RR at BBB (sf)
-- Class F-RR at BBB (low) (sf)
-- Class G-RR at BB (high) (sf)
-- Class H-RR at BB (low) (sf)
-- Class J-RR at B (high) (sf)
-- Class K-RR at B (low) (sf)

All trends are Stable

The rating confirmations reflect the overall stable performance in the four years since issuance, with a small concentration of loans on the servicer’s watchlist and no loans specially serviced or delinquent as of the most recent remittance. In addition, cash flows have been steady with the pool reporting a debt service coverage ratio (DSCR) above 2.00 times (x) based on the most recent year-end reporting.

As of the September 2023 remittance, all 58 loans remain in the pool with a collateral reduction of 2.1% since issuance. The pool is concentrated by property type as seven loans, representing 25.3% of the pool, are secured by office properties. Although the office concentration for this transaction is noteworthy given the challenges for that property type in the current environment, DBRS Morningstar notes that, overall, the office loans in this pool are generally performing as expected, with the YE2022 DSCRs generally in line with or exceeding issuance levels. Ten loans, representing 18.7% of the pool, are on the servicer’s watchlist, with only three loans, representing 5.8% of the pool, being monitored for low cash flow while the other seven loans are being monitored for various noncredit issues, including unsubmitted financial statements, deferred maintenance, and below-average property quality, per the most recent site inspections.

The DoubleTree ABQ loan (Prospectus ID#12; 2.7% of the pool) is secured by a 295-key, full-service hotel in Albuquerque, New Mexico. The loan is on the watchlist for low DSCR as revenues have been depressed in the last several years because of the effects of the Coronavirus Disease (COVID-19) pandemic. The loan has been reporting DSCRs well below issuance figures, with a DSCR of 1.16x for the trailing 12 months (T-12) ended June 30, 2023, an improvement from YE2020 when the loan was reporting negative cash flows but still below DBRS Morningstar’s expectations. The most recent financials for the T-12 ended June 30, 2023, reported an occupancy rate, average daily rate, and revenue per available room (RevPAR) of 51.9%, $138.68, and $72.03, respectively. The RevPAR has improved year over year but is still below the issuance figure of $78.90. For this review, DBRS Morningstar analyzed the loan with an elevated probability of default, resulting in an expected loss approximately three times the pool average.

The transaction continues to benefit from stable performances by the largest loans in the pool. The two largest loans in the pool, Equinix Data Center (Prospectus ID#1; 8.7% of the pool) and Ceasar’s Bay Shopping Center (Prospectus ID#2; 6.6% of the pool) continue to perform in line with expectations with DSCRs above 2.00x. Equinix Data Center is secured by the leased fee interest in the land underneath three data centers. The improvements are 100.0% leased by Equinix, a leading provider of network-neutral data centers, on a lease through December 2068. Ceasar’s Bay Shopping Center is secured by an anchored retail center in Brooklyn, New York, approximately 13 miles south of Lower Manhattan. The property was 100.0% occupied as of June 2023, with minimal near-term rollover risk.

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 (July 4, 2023) https://www.dbrsmorningstar.com/research/416784.

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 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
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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 analyses 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].