Morningstar DBRS Confirms Credit Ratings on All Classes of BANK 2020-BNK29

DBRS, Inc. (Morningstar DBRS) confirmed all credit ratings on the classes of Commercial Mortgage Pass Through Certificates, Series 2020-BNK29 issued by BANK 2020-BNK29 as follows:

-- Class A-1 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-S at AAA (sf)
-- Class B at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class A-3-1 at AAA (sf)
-- Class A-3-X1 at AAA (sf)
-- Class A-3-2 at AAA (sf)
-- Class A-3-X2 at AAA (sf)
-- Class A-4-1 at AAA (sf)
-- Class A-4-X1 at AAA (sf)
-- Class A-4-2 at AAA (sf)
-- Class A-4-X2 at AAA (sf)
-- Class A-S-1 at AAA (sf)
-- Class A-S-X1 at AAA (sf)
-- Class A-S-2 at AAA (sf)
-- Class A-S-X2 at AAA (sf)
-- Class C at AA (high) (sf)
-- Class D at A (high) (sf)
-- Class X-D at A (sf)
-- Class E at A (low) (sf)
-- Class X-F at A (low) (sf)
-- Class F at BBB (high) (sf)
-- Class X-G at BBB (sf)
-- Class G at BBB (low) (sf)
-- Class X-H at BBB (low) (sf)
-- Class H at BB (high) (sf)
-- Class X-J at BB (sf)
-- Class J at BB (low) (sf)
-- Class X-K at B (high) (sf)
-- Class K at B (sf)

All trends are Stable.

The credit rating confirmations and Stable trends on all classes reflect the overall stable performance of the underlying loans in the pool as evidenced by the strong weighted-average (WA) debt service coverage ratio (DSCR) of 2.87 times (x) and the healthy WA debt yield (DY) of 10.3% based on the most recent financials reported. There is a noteworthy concentration of office-backed loans in this pool at more than half of the transaction balance, but overall those loans are performing as expected with a few exceptions. Loans backed by office collateral most recently reported a WA DSCR of 3.21x and a WA DY of 10.3%, suggesting the term risks remain generally low. Morningstar DBRS is highlighting two loans for asset-specific concerns in the Triangle 54 loan (Prospectus ID#9; 3.8% of the pool), which is secured by a single-tenant suburban office property with all of the space advertised for sublease, and the Chasewood Technology Park loan (Prospectus ID#15; 1.8% of the pool), which is secured by a suburban office property with declining occupancy since issuance. For this review, Morningstar DBRS increased the probability of default (POD) penalties and/or stressed loan-to-value ratios (LTVs) for each of the office loans in the pool, resulting in a WA expected loss (EL) that was more than 25% higher than the pool average. Although this stressed analysis for these and a few other loans in the pool increased the pool EL beyond the issuance level, there remains significant cushion against loss in the unrated and below investment-grade rated certificates in the capital stack, supporting the credit rating actions with this review.

One additional loan in the top 15 is presenting increased credit risks since the last rating action, and it too was analyzed with an elevated POD penalty. The 114 Mulberry Street loan (Prospectus ID#14; 2.0% of the pool), backed by a mixed-use property in New York City, was returned from special servicing last year following the loan sponsor and guarantor's bankruptcy filing, but it continues to exhibit performance deterioration, reporting a depressed occupancy rate of 68% and a below breakeven DSCR of 0.94x as of the most recent reporting in June 2023. No updated performance metrics have been reported since the loan's return to the master servicer.

Despite the increased risks for certain office loans in the pool, the overall risk is somewhat mitigated by three large loans in the pool, comprising 28.4% of the pool balance, that are secured by office properties in New York City with limited major tenant rollover and reporting an average DSCR and DY of 3.55x and 10.9%, respectively. The largest of these is 250 West 57th Street (Prospectus ID#1; 10.2% of the pool), which is secured by a 540,415-square foot (sf) high-rise office tower with strong credit metrics including the YE2023 DSCR and occupancy rate of 3.82x and 84%, respectively. Four of the top five tenants, accounting for 35% of the property's net rentable area (NRA), have long-term leases that extend beyond the loan's maturity.

The third- and fourth-largest office loans are 120 Wall Street (Prospectus ID#3; 9.4% of the pool) and The Grace Building (Prospectus ID#4; 8.8% of the pool). 120 Wall Street is secured by a 668,276-sf office property in Manhattan's Financial District and The Grace Building is secured by a 48-story Class A office tower in Manhattan, both of which benefit from stable occupancy rates above 90%, minimal near-term rollover, and DSCRs above 2.50x.

As of the August 2024 remittance, all of the original 41 loans remain in the trust, with minimal collateral reduction since issuance. The pool benefits from four loans, representing 4.4% of the pool balance, that have been fully defeased. Another four loans, representing 10.2% of the pool balance, are on the servicer's watchlist for various reasons including declining occupancy and DSCR, deferred maintenance, and noncompliance with loan document provisions.

At issuance, McDonald's Global HQ (Prospectus ID#6; 4.7% of the pool), The Grace Building (Prospectus ID#4; 8.8% of the pool), and Turner Towers (Prospectus ID#13; 2.7% of the pool) were assigned investment-grade shadow ratings by Morningstar DBRS. With this review, Morningstar DBRS confirms the performance of these loans remains consistent with investment-grade characteristics based on strong credit metrics and continued stable performance.

Morningstar DBRS' credit ratings on the applicable classes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transactions' respective press releases at issuance.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

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 Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings at https://dbrs.morningstar.com/research/437781 (August 13, 2024).

Classes X-A, X-B, X-D, X-F, X-G, X-H, X-J, and X-K 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 Morningstar DBRS.

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

The principal methodology is North American CMBS Surveillance Methodology (March 1, 2024), https://dbrs.morningstar.com/research/428798.

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

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.

Morningstar DBRS 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, Inc.
22 West Washington Street
Chicago, IL 60602 USA
Tel. +1 312 332-3429

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

North American CMBS Multi-Borrower Rating Methodology (March 1, 2024)/North American CMBS Insight Model v 1.2.0.0, (https://dbrs.morningstar.com/research/428797

Rating North American CMBS Interest-Only Certificates (June 28, 2024), https://dbrs.morningstar.com/research/435294

Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (September 19, 2024), https://dbrs.morningstar.com/research/439702

North American Commercial Mortgage Servicer Rankings (August 23, 2024), https://dbrs.morningstar.com/research/438283

Legal Criteria for U.S. Structured Finance (April 15, 2024), https://dbrs.morningstar.com/research/431205

For more information on this credit or on this industry, visit https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.