Morningstar DBRS Confirms All Credit Ratings on CAMB Commercial Mortgage Trust 2019-LIFE

DBRS Limited (Morningstar DBRS) confirmed its credit ratings on the Commercial Mortgage Pass-Through Certificates, Series 2019-LIFE issued by CAMB Commercial Mortgage Trust 2019-LIFE as follows:

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

All trends are Stable.

The credit rating confirmations and Stable trends reflect the underlying portfolio's continued performance since issuance. The $1.17 billion trust mortgage loan is secured by the sponsor's leasehold interest in eight life sciences office and laboratory buildings, totaling approximately 1.3 million square feet in Cambridge, Massachusetts. The senior mortgage loan had an initial two-year term with five one-year extension options, resulting in a fully extended maturity date of December 9, 2025. The floating-rate loan pays interest only (IO) throughout the term. Additionally, the capital stack includes mezzanine debt of $130.0 million held outside of the trust. Loan proceeds, along with $448.7 million of borrower cash equity, facilitated the acquisition of the portfolio properties by the sponsorship group, Brookfield Asset Management.

The portfolio benefits from a high concentration of institutional-quality tenants, with the majority of tenants being public companies and/or major research institutions. As of the September 2024 rent roll, the portfolio was 95.9% occupied, which remains in line with historical performance. The largest tenant by square footage is Takeda Pharmaceuticals U.S.A., Inc., representing 31.7% of the net rentable area (NRA), while Takeda Vaccines, Inc. represents 6.0% of the NRA. Other major tenants include Agios Pharmaceuticals, Inc. (15.3% of the NRA), Blueprint Medicines Corporation (12.6% of the NRA), and Brigham & Women's Hospital Inc. (9.3% of the NRA). Most of the in-place tenants have invested a considerable amount of their own capital into their space build-outs, demonstrating their commitment to the property. While lease rollover is not concentrated until 2029, the property's largest tenant, Takeda, has undergone various cost-cutting efforts throughout 2024 to increase operating profits. According to a Boston.com article from October 2024, Takeda announced at least 684 layoffs for its Cambridge offices, with a total head count reduction of nearly 1,000 employees across the company by mid-2025.

According to the September 2024 annualized financials, the consolidated net cash flow (NCF) of $132.1 million (reflecting a debt service coverage ratio of 1.44 times) reflects a 2.0% increase from the YE2023 figure and a 47.6% increase from the Morningstar DBRS NCF derived at issuance. The improvement in cash flow is primarily driven by increases in base rents stemming from rent steps.

Morningstar DBRS' April 2024 credit rating analysis and credit rating actions included an updated collateral valuation. For more information regarding the approach and analysis conducted, please refer to the press release titled "Morningstar DBRS Takes Rating Actions on North American Single-Asset/Single-Borrower Transactions Backed by Office Properties," published on April 15, 2024. For purposes of this credit rating action, Morningstar DBRS maintained the valuation approach from the April 2024 review, which was based on a blended capitalization rate of 6.6% applied to the YE2022 NCF of $125.3 million with a 20% haircut applied to evaluate the possibility for credit rating upgrades. Morningstar DBRS also maintained positive qualitative adjustments to the loan-to-value ratio (LTV) sizing benchmarks totaling 7.0% to reflect the subject portfolio's property-level quality, stable historical occupancy, and generally long-term in-place tenancy with investment-grade tenants. The Morningstar DBRS concluded value of $1.52 billion represents a -9.3% variance from the issuance appraised value of $1.67 billion and implies an all-in LTV of 85.6%, including mezzanine debt.

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-NCP 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 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
-- Interest Rate Stresses for U.S. Structured Finance Transactions (February 26, 2024), https://dbrs.morningstar.com/research/428623

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.