Press Release

Morningstar DBRS Confirms Credit Ratings on All Classes of CLNY Trust 2019-IKPR

CMBS
July 02, 2025

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

-- Class A at AAA (sf)
-- Class B to AA (low) (sf)
-- Class C to A (low) (sf)
-- Class D to BB (sf)
-- Class E to B (low) (sf)
-- Class F to CCC (sf)
-- Class G at CCC (sf)

The trends on all Classes are Negative, with the exception of Classes F and G, which have credit ratings that do not typically carry a trend in commercial mortgage-backed securities (CMBS) credit ratings.

The credit rating confirmations reflect Morningstar DBRS' overall outlook for the transaction, which remains relatively unchanged since the prior review in July 2024. At that time, Morningstar DBRS downgraded its credit ratings on Classes B through F, based on the downward pressure implied by the loan-to-value (LTV) sizing benchmarks, following updates to Morningstar DBRS' analysis. At issuance, the interest-only (IO), floating-rate loan was secured by a portfolio of 46 extended-stay, limited-service, and full-service hotels in 16 states across the U.S. with approximately 6,000 guest rooms. To date, five properties have been released from the trust. The current trust balance of $718.1 million represents a nominal collateral reduction of 4.9% since issuance.

The loan had an initial two-year term that ended in November 2021, with five 12-month extension options, resulting in a fully extended maturity date in November 2026. The borrower previously requested a loan modification in conjunction with exercising the third extension option. The loan agreement was subsequently modified where the required debt yield requirement to exercise the fourth extension option was waived, with the final extension option requiring a debt yield of 7.75% for the senior debt instead of the original 10.2% threshold. In addition, the borrower's contribution to cure the debt yield hurdle was capped at $10.0 million on the senior debt, thereby limiting deleveraging of the loan upon final maturity. Other terms of the modification included the removal of mezzanine debt service payments from the waterfall in the cash management agreement to allow additional cash to be trapped. The loan was scheduled to mature in November 2024 and despite the aforementioned modification, the borrower failed to execute the fourth extension option, resulting in the loan's transfer to special servicing in March 2025. The servicer has noted that the borrower and mezzanine lender are currently negotiating the terms of a modification. The developments outlined above, in addition to the uncertainty surrounding the loan modification and the sustained reduction in net cash flow (NCF), which as of YE2024 was 44.5% less than the issuance figure of $75.9 million, further support maintaining the Negative trends with this review.

The hotels operate under the Marriott, Hyatt, and Hilton brands, in addition to eight different sub-brands. The majority of the portfolio consists of extended-stay hotels and all the hotels are conjoined by cross-defaulted and cross-collateralized mortgages, deeds of trust, indenture deeds of trust, or similar instruments applicable in each jurisdiction, plus liens on the furniture, fixture, equipment, and leases. As of June 2025, reserve balances total $15.4 million, the majority of which is held across repair reserves. At issuance, the initial sponsor, Colony Capital, Inc. had planned to complete a portfolio-wide property improvement plan of $113.7 million between 2019 to 2024. The servicer noted that the current loan sponsor, Highgate (an affiliate of Cerberus Capital Management, L.P.), which assumed the loan in 2021, has completed all work required by the respective franchise agreements; although, the final cost was not provided.

According to the YE2024 financial reporting, the remaining 41 properties within the portfolio generated $42.2 million of NCF (a debt service coverage ratio (DSCR) of 0.71 times (x)), marginally less than the YE2023 figure of $44.7 million (a DSCR of 0.76x). The decline in cash flow has been driven by an increase in expenses, notably insurance, repair and maintenance, real estate taxes, and room expenses. In addition, because of the floating-rate nature of the loan, debt service obligations have increased substantially. It is worthy to note that the loan documents require the borrower to purchase an interest rate capitalization agreement with each extension option where a minimum DSCR of 1.10x is achieved. As of December 2024, the portfolio was approximately 69.0% occupied, less than the issuance figure of 77.0% but generally in line with the last few reporting periods. The portfolio reported average daily rate, and revenue per available room (RevPAR) figures of $144.0 and $98.8, respectively, relatively in line with the prior year but less than the RevPAR figure at issuance of $108.0.

Morningstar DBRS derived a value of $468.6 million based on the in-place YE2024 NCF (adjusted for the released properties), and a capitalization rate of 9.0%, resulting in a Morningstar DBRS LTV of 153.3% based on the trust loan balance of $718.1 million. The Morningstar DBRS value represents a -54.6% variance from the cumulative issuance appraised value of $1.03 billion for the remaining properties in the portfolio. Including the senior and junior mezzanine debt, the whole-loan LTV rises to 174.6%. Positive qualitative adjustments of 2.0% were maintained to reflect the quality of the properties and market fundamentals as the properties are geographically diverse.

The credit ratings assigned to Classes C, D, and E are three or more notches higher than what the LTV sizing benchmarks imply. These variances are warranted given the cash flow trends and key performance indicators evidenced over the last several reporting periods appear to be stabilizing. In addition, should the sponsor continue to release properties, the trust would continue to benefit from additional collateral reduction and an increase in credit support. However, given the overall decline in NCF and the uncertainty surrounding the terms of the loan modification, Negative trends were reaffirmed for Classes A through E. Morningstar DBRS will continue to monitor this transaction for updates.

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 (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 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.

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
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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 (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 (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.

Ratings

CLNY Trust 2019-IKPR
  • Date Issued:Jul 2, 2025
  • Rating Action:Confirmed
  • Ratings:AAA (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jul 2, 2025
  • Rating Action:Confirmed
  • Ratings:AA (low) (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jul 2, 2025
  • Rating Action:Confirmed
  • Ratings:A (low) (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jul 2, 2025
  • Rating Action:Confirmed
  • Ratings:BB (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jul 2, 2025
  • Rating Action:Confirmed
  • Ratings:B (low) (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jul 2, 2025
  • Rating Action:Confirmed
  • Ratings:CCC (sf)
  • Trend:--
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Jul 2, 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.