DBRS Morningstar Confirms All Classes of Citigroup Commercial Mortgage Trust 2019-C7, Assigns One with Interest in Arrears Designation

DBRS Limited (DBRS Morningstar) confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2019-C7 issued by Citigroup Commercial Mortgage Trust 2019-C7 as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-AB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A AAA (sf)
-- Class B at AAA (sf)
-- Class C at A (high) (sf)
-- Class X-B at AAA (sf)
-- Class D at BBB (high) (sf)
-- Class E at BBB (low) (sf)
-- Class X-D at BBB (sf)
-- Class F at BB (high) (sf)
-- Class X-F at BBB (low) (sf)
-- Class G at BB (high) (sf)
-- Class X-G at BBB (low) (sf)
-- Class H at B (high) (sf)
-- Class X-H at BB (low) (sf)
-- Class J-RR at B (low) (sf)

All trends are Stable. Additionally, DBRS Morningstar assigned the Interest in Arrears designation to Class J-RR for the interest shortfalls incurred per the September 2021 remittance.

As of September 2021, one loan, Courtyard by Marriott New Haven/Milford (Prospectus ID#41; 0.8% of the pool), was in special servicing. Courtyard by Marriott New Haven/Milford is secured by a 121-key limited-service hotel in Orange, Connecticut. The loan was transferred to special servicing in July 2020 because of monetary default as a result of cash flow disruptions resulting from the Coronavirus Disease (COVID-19) pandemic. At the time, the borrower was in the midst of a $1 million performance improvement plan. The property was appraised for $11.0 million in August 2020, a 29.0% decrease from the issuance value of $15.5 million, implying a current loan-to-value ratio of 87.1%. According to remittance reports, the loan was in the midst of a modification for several months before recently being finalized. Classes F through J-RR experienced a cumulative interest shortfall of $287,000 stemming from interest-clawback provisions agreed between the lender and the borrower to bring the loan in line with the current amortization schedule. As of the October 2021 remittance, the interest shortfalls for classes F through H have been repaid and the loan has been returned to the master servicer.

The current composition of the pool shows a moderate concentration of hospitality and retail properties of around 9.0% and 18.1%, respectively. These property types have been disproportionately negatively affected by the coronavirus pandemic and pose slightly elevated risks for the pool. The transaction is concentrated by property type as 18 loans, representing 29.8% of the current pool balance, are secured by multifamily assets.

As of the October 2021 remittance, all 55 original loans remain in the pool. No loans have been defeased. There are 13 loans, representing 31.7% of the current pool balance, on the servicer’s watchlist for a variety of reasons including low occupancy and low debt service coverage ratio.

At issuance, DBRS Morningstar assigned an investment-grade shadow rating on 650 Madison Avenue (Prospectus ID#2, 4.4% of the pool) and 805 3rd Avenue (Prospectus ID#3, 4.4% of the pool). With this review, DBRS Morningstar confirmed that the performance of these loans remain consistent with investment-grade loan characteristics.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

Classes X-A, X-B, X-D, X-F, X-G and X-H are interest-only (IO) certificates 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 ratings are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by DBRS Morningstar.

The DBRS Viewpoint platform provides additional information on this transaction and underlying loans including DBRS Morningstar metrics, commentary, servicer-reported cash flows, and other performance-related data.

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com. The platform includes issuer and servicer data for most outstanding CMBS transactions (including non-DBRS Morningstar rated), as well as loan-level and transaction-level commentary for most DBRS Morningstar-rated and -monitored transactions.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is the North American CMBS Surveillance Methodology (March 26, 2021), which can be found on dbrsmorningstar.com under Methodologies & Criteria. For a list of the structured-finance-related methodologies that may be used during the rating process, please see the DBRS Morningstar Global Structured Finance Related Methodologies document, which can be found on dbrsmorningstar.com in the Commentary tab under Regulatory Affairs. Please note that not every related methodology listed under a principal structured finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482/baseline-macroeconomic-scenarios-application-to-credit-ratings.

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@dbrsmorningstar.com.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

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

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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