Morningstar DBRS Confirms Credit Ratings on All Classes of Benchmark 2020-IG3 Mortgage Trust

DBRS Limited (Morningstar DBRS) confirmed its credit ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2020-IG3 issued by Benchmark 2020-IG3 Mortgage Trust as follows:

-- Class A2 at AAA (sf)
-- Class A3 at AAA (sf)
-- Class A4 at AAA (sf)
-- Class ASB at AAA (sf)
-- Class AS at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at BBB (high) (sf)
-- Class D at BBB (low) (sf)
-- Class XA at AAA (sf)

-- Class 825S-A at A (low) (sf)
-- Class 825S-B at BBB (low) (sf)
-- Class 825S-C at BB (low) (sf)
-- Class 825S-D at B (low) (sf)

-- Class T333-A at A (high) (sf)
-- Class T333-B at BBB (high) (sf)
-- Class T333-C at BB (high) (sf)
-- Class T333-D at BB (sf)

-- Class BX-A at A (low) (sf)
-- Class BX-B at BBB (low) (sf)
-- Class BX-C at BB (high) (sf)

All trends are Stable.

The credit rating confirmations reflect the transaction's overall stable performance. The pool continues to report healthy performance metrics, with a weighted-average debt service coverage ratio (DSCR) of 2.98 times per the most recent financials reported for the underlying loans. Additionally, the majority of loans benefit from subordinate debt held outside the trust and the correspondingly lower loan-to-value ratios (LTVs) on the senior debt held in the subject transaction. As of the January 2025 remittance, all nine original loans remain in the pool, with only one loan, Stonemont Net Lease Portfolio (Prospectus ID#9; 7.2% of the pool), in special servicing as the borrower was not able to secure takeout financing prior to the loan's maturity on January 10, 2025. Three loans, representing 20.6% of the pool, are on the servicer's watchlist and are being monitored for low DSCR and/or upcoming maturity. Per the servicer's most recent commentary, the individual borrowers are working on refinancing the watchlisted loans that are set to mature in the near term.

The transaction is a pooled securitization of pari passu pieces of nine fixed-rate loans backed by office, industrial, multifamily, retail, and mixed-use property types. All loans in the transaction, with the exception of 825 South Hill (Prospectus ID#8; 8.9% of the pool), are interest only (IO) during their entire loan terms, and as of the January 2025 remittance, there has been nominal collateral reduction since issuance because of the release of individual properties in the BX Industrial Portfolio (Prospectus ID#1; 11.8% of the pool). Given the large concentration of office collateral in the pool (72.1% of the pool), Morningstar DBRS has a generally conservative outlook and maintained stressed scenarios where appropriate to reflect increased credit risks. The resulting analysis supported the credit rating confirmations.

Eleven classes are loan-specific certificates, or rake bonds. Classes 825S-A, 825S-B, 825S-C, and 825S-D are loan-specific certificates associated with the subordinate component of the 825 South Hill loan, which is backed by a luxury multifamily property in Los Angeles. Classes T333-A, T333-B, T333-C, and T333-D are loan-specific certificates associated with the subordinate component of the Tower 333 loan (Prospectus ID#5; 13.5% of the pool), secured by an office tower in Bellevue, Washington. The property is fully occupied by Amazon.com, Inc. via a lease through September 2036, with several renewal options and no termination or contraction clauses. With this review, Morningstar DBRS confirms that these assets continue to exhibit performance that remains in line with issuance expectations and is consistent with investment-grade characteristics.

Classes BX-A, BX-B, and BX-C are loan-specific certificates associated with the subordinate component of the BX Industrial Portfolio loan. The loan was secured by a portfolio of 68 industrial and logistics properties at issuance. Releases are permitted via a prepayment premium of 105.0% of the allocated loan amount (ALA), until the original principal balance reduces by 30.0%, and 110.0% of the ALA thereafter. To date, approximately 18 properties have been released (more than 20.0% of the issuance ALA), reducing the issuance senior trust balance and the total appraisal value by approximately 12.2% and 23.4%, respectively, per the January 2025 reporting. In the analysis for this credit rating action, the Morningstar DBRS value was updated to reflect both the property releases to date and to evaluate the credit ratings' sensitivity to a value decline over the remainder of the loan term should temporary performance declines be realized. Morningstar DBRS considered a conservative haircut to the net cash flow of $47.8 million for the trailing 12-month period ended June 2024 and maintained the 7.25% capitalization rate applied at the prior credit rating action, resulting in a Morningstar DBRS value of $523.4 million, which represents a variance of -28.9% to the issuance appraised values for the remaining collateral. Additionally, Morningstar DBRS maintained positive qualitative adjustments totaling 5.25% in the LTV sizing benchmarks to reflect the favorable geographic diversification, low cash flow volatility, and property quality. The resulting proceeds supported the credit rating confirmations with this review.

The largest loans on the servicer's watchlist are the Chase Center Towers I/II loans (Prospectus IDs #6 and #7; 11.5% of the pool), secured by two Class A office buildings totaling more than 586,000 square feet in San Francisco's Mission Bay district. As the components of the whole mortgage loan are also securitized in another Morningstar DBRS-rated transaction, Benchmark 2020-IG2 Mortgage Trust, please see the related press release published on January 21, 2025, at https://dbrs.morningstar.com for a detailed discussion of that property and Morningstar DBRS' analytical approach.

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 (August 13, 2024) at https://dbrs.morningstar.com/research/437781.

Class X-A is an IO certificate that references 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 (December 13, 2024) https://dbrs.morningstar.com/research/444617.

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

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 info-DBRS@morningstar.com.

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 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://dbrs.morningstar.com/about/methodologies.

-- North American CMBS Multi-Borrower Rating Methodology (December 13, 2024) https://dbrs.morningstar.com/research/444616
-- North American Single-Asset/Single-Borrower Ratings Methodology (December 13, 2024) https://dbrs.morningstar.com/research/444612
-- Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (September 19, 2024) https://dbrs.morningstar.com/research/439702
-- Legal Criteria for U.S. Structured Finance (December 3, 2024) https://dbrs.morningstar.com/research/444064
-- North American Commercial Mortgage Servicer Rankings (August 23, 2024) https://dbrs.morningstar.com/research/438283

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

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