Morningstar DBRS Confirms Credit Ratings on All Classes of SG Commercial Mortgage Securities Trust 2019-787E

DBRS Limited (Morningstar DBRS) confirmed its credit ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2019-787E issued by SG Commercial Mortgage Securities Trust 2019-787E:

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

All trends are Stable.

The credit rating confirmations reflect the underlying collateral's overall stable performance, which remains in line with Morningstar DBRS' expectations since its previous credit rating action in April 2024. The property remains 100% occupied by five tenants, all of which are signed to leases that expire beyond the loan's maturity date in February 2029.

The transaction consists of a $187.5 million portion of a $410.0 million whole loan that pays interest only for the full term. The whole loan is composed of $175.0 million of senior companion loans, a $117.5 million subordinate A note, and a $117.5 million junior B note. The collateral consists of a 513,638-square-foot (sf), 10-story Class A mixed-use building, known as 787 Eleventh Avenue, with office as well as automotive retail showroom and service center space. The building is well located in Manhattan's Automotive Row, which is also home to 20 other automotive dealers. The retail-auto showroom and service space (representing approximately 44.0% of the net rentable area (NRA)) is 100% leased to Jaguar Land Rover and Nissan/Infiniti (Nissan). While both leases run three years beyond the loan's maturity, it is noteworthy that Nissan's parent company is currently experiencing financial troubles amid declining sales and increasing debt levels.

The property's largest tenant, Mount Sinai School of Medicine (Mount Sinai; 36.5% of NRA), took occupancy in 2022 and began paying rent in 2023. The tenant is currently paying a base rental rate of $57.04 per sf, which is scheduled to increase every year until its lease expiry in 2054. According to the YE2023 financials, the loan reported a net cash flow (NCF) of $25.4 million, representing a 40.1% increase from the YE2022 NCF because of Mount Sinai's rental abatements burning off in 2023. In the trailing nine-month period ended September 30, 2024, the loan reported an annualized NCF of $29.6 million, reflecting a debt service coverage ratio of 2.19 times.

Morningstar DBRS' previous credit rating action in April 2024 included an update to the asset's 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 7.75% applied to the Morningstar DBRS NCF of $24.9 million based on a stress to the YE2023 NCF figure. Morningstar DBRS also maintained positive qualitative adjustments to the loan-to-value ratio (LTV) sizing benchmarks, totaling 5.0%, to reflect the subject property's quality, its stable cash flow provided by its long-term tenancy, and its location within Manhattan's Automotive Row. Morningstar DBRS' concluded value of $321.3 million represents a variance of -50.6% from the issuance appraised value of $650.0 million and implies an A note LTV of 91.0% and a whole loan LTV of 127.6%.

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 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 is an interest-only (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 (February 28, 2025) https://dbrs.morningstar.com/research/448963.

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 (February 28, 2025),
https://dbrs.morningstar.com/research/448962
-- 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.