DBRS Morningstar Confirms Ratings on All Classes of BANK 2020-BNK26

DBRS Limited (DBRS Morningstar) confirmed the ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2020-BNK26 issued by BANK 2020-BNK26 as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-3-1 at AAA (sf)
-- Class A-3-2 at AAA (sf)
-- Class A-3-X1 at AAA (sf)
-- Class A-3-X2 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-4-1 at AAA (sf)
-- Class A-4-2 at AAA (sf)
-- Class A-4-X1 at AAA (sf)
-- Class A-4-X2 at AAA (sf)
-- Class X-A at AAA (sf)
-- Class A-S at AAA (sf)
-- Class A-S-1 at AAA (sf)
-- Class A-S-2 at AAA (sf)
-- Class A-S-X1 at AAA (sf)
-- Class A-S-X2 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class B at AA (high) (sf)
-- Class X-B at A (high) (sf)
-- Class C at A (sf)
-- Class X-D at BBB (high) (sf)
-- Class D at BBB (high) (sf)
-- Class E at BBB (sf)
-- Class X-F at BBB (low) (sf)
-- Class F at BB (high) (sf)
-- Class X-G at BB (low) (sf)
-- Class G at B (high) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance. As of the November 2021 remittance, there has been minimal collateral reduction of 0.6%, with all 75 original loans remaining in the pool. There is one loan in special servicing, representing 1.6% of the current pool balance, and it is the sole delinquency in the pool. There are 13 loans on the servicer’s watchlist, representing 28.1% of the current pool balance; the majority of loans have been flagged for performance-related issues stemming from the Coronavirus Disease (COVID-19) pandemic.

The only loan in special servicing, Forsyth Multifamily Portfolio (Prospectus ID#20; 1.6% of the pool balance), is secured by three mixed-use buildings with retail units on the ground floor and residential units on the upper floors in the Lower East Side neighbourhood of Manhattan, New York. The special servicer is currently finalizing a loan modification while also dual tracking foreclosure. Details surrounding the proposed terms of the modification include release of $100,000 from the renovation reserve to assist the borrower in bringing the loan current; the borrower bringing the loan current, repaying those released reserve funds over 12 months commencing January 2022, and personally guaranteeing the released funds; and workout of the remaining outstanding fees. Discussions between the borrower and the special servicer remain ongoing as of this commentary.

Based on the most recent financials, the loan reported a debt service coverage ratio (DSCR) of 0.98 times (x) for the trailing six months ended June 30, 2020, compared with the DBRS Morningstar term DSCR of 1.67x. At issuance, the collateral was valued at $28.8 million; however, as of the January 2021 appraisal, the portfolio was valued at $21.9 million. DBRS Morningstar notes mitigating factors such as the property’s desirable location, borrower commitment, recent loan modification discussions, and the positive developments in 2021 with a rebound in occupancy to 80% in May 2021 from 68% in June 2020. Considering the New York foreclosure and commercial eviction moratoriums, there will likely be lengthy delays if foreclosure is pursued.

At issuance, DBRS Morningstar shadow-rated five of the top 10 loans in the pool as investment grade. These loans are Bravern Office Commons (Prospectus ID#2; 6.3% of the pool), 560 Mission Street (Prospectus ID#3; 5.9% of the pool), 55 Hudson Yards (Prospectus ID#6; 4.7% of the pool), 1633 Broadway (Prospectus ID#8; 3.4% of the pool), and Bellagio Hotel and Casino (Prospectus ID#9; 2.9% of the pool). With this review, DBRS Morningstar recognizes that the characteristics of each loan remain in line with the respective investment-grade shadow ratings.

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, and X-G 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.

DBRS Morningstar provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Prospectus ID#20 – Forsyth Multifamily Portfolio (1.6% of the pool)

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 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.

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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