DBRS Morningstar Confirms Ratings on Benchmark 2020-IG3 Mortgage Trust

DBRS Limited (DBRS Morningstar) confirmed its ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2020-IG3 issued by Benchmark 2020-IG3 Mortgage Trust:

-- Class A2 at AAA (sf)
-- Class A3 at AAA (sf)
-- Class A4 at AAA (sf)
-- Class ASB at AAA (sf)
-- Class AS at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class D at BBB (sf)
-- Class XA at AAA (sf)

-- Class 825S-A at A (low) (sf)
-- Class 825S-B at BBB (low) (sf)
-- Class 825S-C at BB (low) (sf)
-- Class 825S-D at B (low) (sf)

-- Class T333-A at AA (low) (sf)
-- Class T333-B at A (low) (sf)
-- Class T333-C at BBB (low) (sf)
-- Class T333-D at BB (high) (sf)

-- Class BX-A at A (low) (sf)
-- Class BX-B at BBB (low) (sf)
-- Class BX-C at BB (high) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction, which remains in line with DBRS Morningstar’s expectations. The transaction is a pooled securitization of 21 fixed-rate, noncontrolling (with the exception of 1501 Broadway) pari passu senior notes with an aggregate cut-off pooled balance of $608.5 million. The collateral consists of nine mortgage loans across 144 properties, with significant concentrations in California (nine properties; 47.7% of the pool), New York (four properties; 17.8% of the pool), and Washington (one property; 13.1% of the pool). The pool benefits from the high concentration of investment-grade assets. All nine loans that serve as the collateral for the pooled component of the transaction are shadow-rated investment grade and exhibit investment-grade credit characteristics on a stand-alone basis. All but one of the pooled loans in the transaction are interest only (IO) during their entire loan terms.

The trust also includes 11 classes of loan-specific certificates, or rake bonds. Classes 825S-A, 825S-C, and 825S-D are loan-specific certificates associated with the subordinate component of the 825 South Hill loan. Classes T333-A, T333-B, T333-C, and T333-D are loan-specific certificates associated with the subordinate component of the Tower 333 loan. Classes BX-A, BX-B, and BX-C are loan-specific certificates associated with the subordinate component of the BX Industrial Portfolio loan.

As of the March 2022 remittance report, there were four loans, representing 37.5% of the pool, on the servicer’s watchlist, three of which have remained on the watchlist since DBRS Morningstar’s last rating action. The largest senior-component loan on the watchlist is the City National Plaza loan (13.2% of the pool), which was added to the servicer’s watchlist in February 2022 as a result of the debt service coverage ratio (DSCR) dropping below 80% of the underwritten figure. The loan is secured by two Class A 52-storey office towers that are LEED Platinum certified, totalling 2.5 million square feet in Los Angeles. Occupancy remains consistent, with issuance levels at 81.0% as of September 2021 compared with 81.4% in March 2020. In response to the Coronavirus Disease (COVID-19) pandemic, $1.5 million of rent relief was granted to tenants, and the sponsors funded a $13.6 million debt service reserve at issuance, which helped mitigate some of the risks associated with potential revenue volatility. The dip in reported DSCR, which was 3.21 times (x) at YE2020 compared with the issuer’s figure of 4.59x at securitization, was likely due to rent relief measures and abatement periods for tenants that recently took occupancy. The year-to-date September 2021 DSCR of 3.97x indicates that revenue is stabilizing. The loan remains current and there is minimal lease rollover in the near term.

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.

Class XA is an 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 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 this transaction.

The DBRS Morningstar 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.

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

The principal methodology is North American CMBS Surveillance Methodology (March 4, 2022), 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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