DBRS Morningstar Confirms All Classes of Wells Fargo Commercial Mortgage Trust 2019-C49

DBRS Limited (DBRS Morningstar) confirmed the ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2019-C49 issued by Wells Fargo Commercial Mortgage Trust 2019-C49:

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

All trends are Stable.

The credit rating confirmations reflect the pool’s stable performance since DBRS Morningstar’s last credit rating action. The pool benefits from a relatively low office concentration, a significant uptick in defeasance since last review, and an improving pool weighted-average (WA) debt service coverage ratio (DSCR), which was reported at 1.82 times (x), up from 1.56x at issuance. In addition, one of the three loans in special servicing at last review (599 Johnson Avenue; Prospectus ID#45, 0.8% of the pool) was returned to the master servicer in July 2023 as a corrected loan. Although there are 10 loans representing 17.1% of the pool on the servicer’s watchlist, including two loans in the top 10, the overall pool continues to perform in line with DBRS Morningstar’s expectations.

As of the October 2023 reporting, all 64 loans remain in the pool, with an aggregate trust balance of $756.3 million, representing a collateral reduction of approximately 2.3% since issuance. A total of eight loans, representing 9.2% of the pool have defeased to date. The pool is most concentrated by loans backed by retail and lodging properties, which represent 30.0% and 20.1% of the pool, respectively. There are two loans in special servicing, Florissant Marketplace (Prospectus ID#19, 1.6% of the pool) and 659 Broadway (Prospectus ID#46, 0.8% of the pool), which have exhibited minimal changes in performance since DBRS Morningstar’s last credit rating action. Florissant Marketplace is secured by a 146,257-square-foot (sf) retail establishment in Florissant, Missouri. The loan transferred to the special servicer in July 2020 because of Coronavirus Disease (COVID-19) pandemic-related payment delinquency. As of October 2023, the loan remains delinquent, and a receiver has been appointed. According to the servicer, excess cash is being swept in order to pay down $990,000 in outstanding advances and fund capital expenditure projects. The posted workout strategy is foreclosure. An October 2022 appraisal valued the property at $8.6 million, a slight increase from the September 2021 value of $8.4 million, but well below the issuance figure of $17.3 million. DBRS Morningstar’s analysis included a liquidation scenario for this loan, which resulted in a projected loss severity in excess of 60.0%.

The second loan in special servicing, 659 Broadway (Prospectus ID#46, 0.8% of the pool), is secured by a 4,876-sf, single-tenant retail property situated within a larger residential co-op building known as Bleecker Court, located in Manhattan. The loan transferred to the special servicer in August 2020 as a result of payment default. The original single tenant, Blades Skate and Apparel, vacated its space in December 2019. The borrower executed an unauthorized lease with a new tenant, Sneaker City, in January 2022. The borrower also failed to remit funds into a required lockbox account by YE2022, which triggered cash management beginning in Q1 2023. The posted workout strategy is foreclosure, with an auction date scheduled for November 2023. DBRS Morningstar’s analysis included a liquidation scenario for this loan, which resulted in a projected loss severity in excess of 50.0%.

Of the 10 loans on the servicer’s watchlist, DBRS Morningstar made an adjustment for Shops at Trace Fork (Prospectus ID#4, 5.3% of the pool), which is secured by a 367,460-sf anchored retail property in Charleston, West Virginia. The property’s largest tenant, Lowe’s (36.8% of total net rentable area), has an upcoming lease expiration in July 2024 and the tenant has not yet extended its lease. In addition, the reported net cash flow has declined slightly since issuance. Given these factors, DBRS Morningstar analyzed this loan with a stressed loan-to-value scenario for this review. The resulting expected loss exceeded that of the pool by approximately 10.0%.

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/416784 (July 4, 2023).

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
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 22, 2023; https://www.dbrsmorningstar.com/research/420982)

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)

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].