Morningstar DBRS Confirms All Credit Ratings of Hudson Yards 2019-30HY Mortgage Trust

DBRS Limited (Morningstar DBRS) confirmed all credit ratings on all the classes of Commercial Mortgage Pass-Through Certificates issued by Hudson Yards 2019-30HY Mortgage Trust as follows:

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

All trends are Stable.

The credit rating confirmations reflect the overall stable performance of the transaction, which remains in line with Morningstar DBRS' expectations since issuance evidenced by the continued stable occupancy and cash flow.

The loan is secured by the borrower's condominium interest in 1.5 million square-feet (sf) portion of Class A office space at 30 Hudson Yards in Manhattan. The collateral spans floors 16 through 51 of the 90-storey LEED gold certified building in New York's revitalized Hudson Yards district. The 10-year fixed-rate interest only (IO) loan is sponsored by a joint venture of Arizona State Retirement System, two affiliates of Allianz SE, and affiliates of The Related Companies, L.P. The senior debt consists of $1.12 billion, while the junior debt consists of $310.0 million. The trust includes $698.0 million of senior debt and all of the junior debt. The loan is structured with no available extension options and reaches maturity in July 2029.

As of the September 2024 rent roll, the subject continues to be 100% leased by the single investment-grade tenant, Warner Media, on a lease fully guaranteed by AT&T expiring in 2034, which is five years beyond the July 2029 loan maturity. The triple-net (NNN) lease is structured with annual rent steps of 2.5%, as well as four five-year extension options, each at 100% of the fair market rent. As of the June 2025 rent step, the rental rate for Warner Media will cross $87.00 psf, which is higher than the Penn Station office submarket average asking rent of $82.20 psf according to a Q4 2024 Reis report.

According to the most recent financials, the subject reported a debt service coverage ratio (DSCR) of 2.61 times (x) for the trailing nine-month period ended September 30, 2024, which compares favorably to the YE2023 and YE2022 figure of 2.28x.

At the last credit rating action in April 2024, Morningstar DBRS 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 capitalization rate of 6.75% applied to the Morningstar DBRS NCF of $119.8 million. Morningstar DBRS also maintained positive qualitative adjustments to the Loan-to-Value Ratio (LTV) Sizing benchmarks totaling 8.5% to reflect the subject property's trophy asset status in a sought-after market of New York City. The Morningstar DBRS concluded value of nearly $1.8 billion represents a -17.7% variance from the issuance appraised value of $2.2 billion and implies an all in LTV of 80.6%.

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 factor(s) 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), https://dbrs.morningstar.com/research/437781.

Class X is an IO certificate 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 credit ratings were initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for these credit rating actions.

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with these credit rating actions.

These are solicited credit ratings.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

DBRS, Inc.
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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 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 (July 17, 2023).

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