Press Release

Morningstar DBRS Confirms Credit Ratings on All Classes of Natixis Commercial Mortgage Securities Trust 2019-MILE

CMBS
June 18, 2025

DBRS Limited (Morningstar DBRS) confirmed its credit ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2019-MILE issued by Natixis Commercial Mortgage Securities Trust 2019-MILE as follows:

-- Class A at BBB (low) (sf)
-- Class B at BB (low) (sf)
-- Class C at B (low) (sf)
-- Class D at CCC (sf)
-- Class E at CCC (sf)
-- Class F at CCC (sf)

Morningstar DBRS maintained the Negative trends on Classes A, B, and C, while Classes D, E, and F have credit ratings that typically do not carry a trend in commercial mortgage-backed securities (CMBS).

The credit rating confirmations reflect Morningstar DBRS' outlook on the transaction, which is unchanged since last review, as collateral performance remains in line with expectations. During its previous review in July 2024, Morningstar DBRS downgraded its credit ratings on all classes as a result of the downward pressure implied by the loan-to-value ratio (LTV) sizing benchmarks following updates to the Morningstar DBRS analysis. These updates were made to capture the observed secular shift in use and demand for office space as well as the subject property's low occupancy rate, declining cash flow, and soft submarket. Morningstar DBRS has maintained its analytical approach from last review, which considered a conservative liquidation scenario based on an updated Morningstar DBRS-derived dark value for the subject property of $204.1 million, as further detailed below. The resulting loss severity exceeded 50%, suggesting losses could be realized into the Class B certificate upon the eventual disposition of the loan. The Negative trends have been maintained to reflect the potential for further credit deterioration based on the uncertain timeline for disposition and potential for value to decline further.

The loan is secured by the fee-simple and leasehold interests in the Wilshire Courtyard property, comprising two six-story, LEED Gold-certified office buildings (the property) with an aggregate of 1.1 million square feet (sf) in Los Angeles' Miracle Mile submarket. The loan transferred to special servicing in May 2023 as a result of imminent default after the borrower failed to exercise the loan's final maturity extension option, but was returned to the master servicer at the end of 2023 following the execution of a loan modification extending the loan's maturity to July 2026. As a condition of the modification, a $23.9 million principal curtailment was paid, reducing the loan balance to $384.3 million, reflecting a 5.9% reduction from the initial balance of $408.2 million. At closing, there was an additional $69.4 million of mezzanine debt held outside the trust that is coterminous with the mortgage loan.

According to the April 2025 rent roll, the property was 59.6% occupied compared with the implied occupancy rate of 55.0% that Morningstar DBRS assumed at the last review, which included Sony Pictures Entertainment Inc. (Sony; 22.8% of the net rentable area (NRA); lease expiration in May 2036) that took occupancy in June 2024. With consideration for Skydance Media (2.1% of the NRA), which vacated in February 2025, and Concord Music Group, Inc. (3.4% of the NRA), which confirmed its departure in September 2025, the property has an implied occupancy rate closer to 54%. The most notable departure since the last review was that of Twentieth Century Fox Television (formerly 7.3% of NRA), which vacated as expected in December 2024. Seven tenants (14.2% of the NRA) are scheduled to vacate prior to maturity; however, the borrower has gained some leasing momentum during the last 12 months as six new tenants (5.2% of the NRA), in addition to Sony, have signed leases. These tenants will have initial rental rates of more than $50 per square foot (psf).

Five tenants (32.2% of the NRA) are currently receiving full or partial rental abatements. As a result of the rental abatements, the property's net cash flow (NCF) further declined to $12.4 million as of YE2024 from $17.5 million at YE2023 and $20.0 million at YE2022; however, NCF is expected to improve once Sony's rental abatement period ends in November 2025. According to Q1 2025 Reis data, office properties in the Mid-Wilshire/Miracle Mile/Park Mile submarket reported an average asking rental rate of $39.51 psf, in line with the Q1 2024 average asking rate, while the vacancy rate was 22.7%, a slight improvement from 23.3% as of Q1 2024.

While an updated appraisal has not been provided, Morningstar DBRS believes the property value has deteriorated significantly since issuance and, as such, maintained its dark value analysis from last review, which analyzes the potential for principal recoverability in the scenario that the property is 100% vacant. To determine the dark value, Morningstar DBRS assumed that the property was fully vacant and after 1.5 years of downtime would be re-leased to a market. Notable inputs included a vacancy factor of 20.0%, a concluded rental rate $50.0 psf based on recently signed leases, and an expense ratio of 40.0%, which resulted in a stabilized Morningstar DBRS NCF of $28.5 million. A cap rate of 9.25% was applied, supported by market trends and incorporating a 100-basis-point dark-value adjustment to account for the time and risk to re-tenant the space. Tenant improvements (TI) of $68.16 psf and leasing commissions (LC) of 6.0% were maintained from the 2020 analysis.

The total leasing cost to stabilize, including the downtime during which a property owner will still have fixed operating expenses, was $132.9 million. In its analysis, Morningstar DBRS gave credit to the loan's outstanding TI/LC and termination fee reserves of $28.7 million as of the June 2024 remittance, resulting in a dark value of $204.1 million ($192 psf) and an LTV) of 188.3%. Based on the trust amount of $384.3 million, a 1.0% liquidation fee, and one year of principal and interest advances, the total trust exposure could reach approximately $420.3 million. The results of liquidation analysis suggested a loss severity exceeding 50%, which would fully reduce the balance of Class C through Class G and a small portion of Class B.

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 (May 16, 2025) at https://dbrs.morningstar.com/research/454196.

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.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The Morningstar DBRS Long-Term Obligation Rating Scale definition indicates that credit ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS' outlooks and credit ratings are monitored.

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 600
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.

-- Interest Rate Stresses for U.S. Structured Finance Transactions (March 27, 2025): https://dbrs.morningstar.com/research/450750.

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.

Ratings

Natixis Commercial Mortgage Securities Trust 2019-MILE
  • Date Issued:Jun 18, 2025
  • Rating Action:Confirmed
  • Ratings:BBB (low) (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jun 18, 2025
  • Rating Action:Confirmed
  • Ratings:BB (low) (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jun 18, 2025
  • Rating Action:Confirmed
  • Ratings:B (low) (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jun 18, 2025
  • Rating Action:Confirmed
  • Ratings:CCC (sf)
  • Trend:--
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jun 18, 2025
  • Rating Action:Confirmed
  • Ratings:CCC (sf)
  • Trend:--
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jun 18, 2025
  • Rating Action:Confirmed
  • Ratings:CCC (sf)
  • Trend:--
  • Rating Recovery:
  • Issued:CA
  • US = Lead Analyst based in USA
  • CA = Lead Analyst based in Canada
  • EU = Lead Analyst based in EU
  • UK = Lead Analyst based in UK
  • E = EU endorsed
  • U = UK endorsed
  • Unsolicited Participating With Access
  • Unsolicited Participating Without Access
  • Unsolicited Non-participating

ALL MORNINGSTAR DBRS RATINGS ARE SUBJECT TO DISCLAIMERS AND CERTAIN LIMITATIONS. PLEASE READ THESE DISCLAIMERS AND LIMITATIONS AND ADDITIONAL INFORMATION REGARDING MORNINGSTAR DBRS RATINGS, INCLUDING DEFINITIONS, POLICIES, RATING SCALES AND METHODOLOGIES.