Morningstar DBRS Changes Trends on Two Classes of J.P. Morgan Chase Commercial Mortgage Securities Trust 2019-ICON

DBRS Limited (Morningstar DBRS) confirmed its credit ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2019 - ICON issued by J.P. Morgan Chase Commercial Mortgage Securities Trust 2019-ICON as follows:

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

At the prior credit rating action, Morningstar DBRS changed the trends on Classes F and G to Negative from Stable following the loans' transfer to special servicing in February 2024 after the borrower was unable to secure takeout financing. With this review, Morningstar DBRS has changed the trends back to Stable after the loans were modified and transferred back to the master servicer. All other trends remain Stable.

After the release of two properties since issuance, the trust is now secured by 16 separate nonrecourse, first-lien mortgage loans totaling $142.1 million, which include nine multifamily properties and seven mixed-use properties in Manhattan and Brooklyn, New York. The trust debt consists of $46.3 million of Trust A Notes and $72.9 million of Trust B Notes. The Trust A Notes are pari passu with $22.8 million of companion notes that were securitized in the JPMCC 2019-COR5 transaction (not rated by Morningstar DBRS).

The loans were modified in April 2024 to extend their maturity dates one year to January 2025 and were subsequently returned to the master servicer. As a condition of the modification, the borrower was required to pay down each loan such that the individual trailing 12-month (T-12) debt yields were no less than 7.5% and the loans' loan-to-value ratios (LTVs) were no more than 75.0% based on undisclosed December 2023 appraisal values, resulting in a principal reduction totaling $9.3 million. Additionally, in July 2024, the 43 West 27th Street loan (Prospectus ID#4, previously 10.2% of the pool) was paid in full, resulting in a principal paydown of $14.5 million. As of the February 2025 remittance, collateral reduction totals 18.6%, with the whole loan paying down by nearly $30.0 million in the last 12 months. The modification allowed for an additional maturity extension to January 2026, conditional on debt yield and LTV hurdles of 8.25% and 70.0%, respectively. To satisfy those conditions, principal curtailments totaling $2.5 million were applied in January 2025. The maturity extension for each remaining loan has been exercised and the portfolio will remain in a cash trap until paid in full.

Despite the maturity default, aggregate portfolio cash flows continue to trend higher, increasing each year since 2020. The remaining 16 properties reported net cash flow (NCF) totaling $11.8 million during the T-12 period ended September 30, 2024, representing a 9.6% increase over the T-12 ended September 30, 2023, NCF of $10.8 million. As of September 2024, the portfolio's weighted-average occupancy was reported to be 97.4%, up from 95.8% as of September 2023, with individual property occupancies ranging from 77.0% to 100.0%.

In the analysis for this review, Morningstar DBRS updated its LTV sizing approach from the prior credit rating action, applying a capitalization (cap) rate of 7.25% to the T-12 September 2024 NCF of $11.8 million. The resulting Morningstar DBRS value of $162.6 million represents a whole-loan LTV of 87.4%, a 36.5% haircut from the issuance appraised value of $255.9 million for the remaining properties. Morningstar DBRS maintained a positive qualitative adjustment to the LTV sizing benchmarks totaling 4.5% to account for the collateral's lack of significant cash flow volatility, illustrated by stable reporting over the past several years, and strong market fundamentals as a result of the portfolio's location in Manhattan and Brooklyn. Although it is likely that the portfolio's value has deteriorated because of the current interest rate and cap rate environment, the significant amount of deleveraging in the last year and the sponsor's commitment to the collateral are notable mitigants, supporting the credit rating confirmations and trend changes back to Stable with this review.

The Morningstar DBRS credit ratings assigned to Classes C, D, E, F, and G are lower than the results implied by the LTV sizing benchmarks. The variances are warranted given the loans' upcoming maturities in January 2026 and the uncertainty of the portfolio's current value given the current interest rate and cap rate environment.

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.

Classes X-A and X-B 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 (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
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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://dbrs.morningstar.com/about/methodologies.

-- 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

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

-- Legal Criteria for U.S. Structured Finance (December 3, 2024)
https://dbrs.morningstar.com/research/444064

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.