DBRS Morningstar Confirms All Ratings on BANK 2020-BNK29

DBRS Limited (DBRS Morningstar) confirmed its ratings on all classes of Commercial Mortgage Pass Through Certificates, Series 2020-BNK29 issued by BANK 2020-BNK29 as follows:

-- Class A-1 at AAA (sf)
-- Class A-SB 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 X-B 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 B at AAA (sf)
-- Class C at AA (high) (sf)
-- Class X-D at A (sf)
-- Class X-F at A (low) (sf)
-- Class X-G at BBB (sf)
-- Class X-H at BBB (low) (sf)
-- Class X-J at BB (sf)
-- Class X-K at B (high) (sf)
-- Class D at A (high) (sf)
-- Class E at A (low) (sf)
-- Class F at BBB (high) (sf)
-- Class G at BBB (low) (sf)
-- Class H at BB (high) (sf)
-- Class J at BB (low) (sf)
-- Class K at B (sf)

All trends are Stable.

The rating confirmations reflect the transaction’s overall stable performance, which remains in line with DBRS Morningstar’s expectations. At issuance, the transaction consisted of 41 fixed-rate loans secured by 89 commercial and multifamily properties with an initial trust balance of $871.2 million. According to the July 2022 remittance report, all loans remain in the pool and there has been negligible amortization to date.

The transaction is concentrated by property type with eight loans secured by office collateral, 13 loans secured by retail collateral, five loans secured by mixed-use collateral, and five loans secured by self-storage collateral, representing 52.0%, 21.1%, 8.6%, and 5.2% of the pool, respectively. The remaining loans are secured by industrial, co-operative housing, lodging, and mobile home collateral.

According to the July 2022 remittance report, there is one loan (114 Mulberry Street; Prospectus ID#14, 2.0% of the pool) in special servicing and three loans, representing 7.0% of the pool, on the servicer’s watchlist. The loan in special servicing, 114 Mulberry Street, is secured by a mixed-use property comprising 23 multifamily units and 6,993 square feet of commercial space in New York, New York. According to the Q1 2022 financial reporting, the property was 100% occupied with a debt service coverage ratio (DSCR) of 1.50 times (x). Although the loan is current and performing in line with expectations at issuance, it was transferred to the special servicer in June 2022. According to the reporting, the transfer may be tied to the borrower’s bankruptcy filing; however, DBRS Morningstar reached out to the servicer for confirmation and, as of the date of this press release, a response is pending. The largest loan on the servicer’s watchlist, 2100 River (Prospectus ID#11, 3.2% of the pool), is secured by an office property in Portland, Oregon. The loan is being monitored because of a minor deferred maintenance issue that was noted during the most recent property inspection. As of March 2022, the property was 100% occupied and the loan was performing well with a DSCR of 2.62x.

The second-largest loan on the servicer’s watchlist, Turner Towers (Prospectus ID#13, 2.8% of the pool), was shadow-rated investment grade by DBRS Morningstar at issuance. The loan is secured by a 187-unit multifamily co-operative high-rise in Brooklyn, New York, and was added to the servicer’s watchlist because of a decline in the DSCR to 1.20x as of YE2021 from 5.61x at issuance. Although occupancy has remained consistent at 100%, effective gross income declined by 47.6% between YE2020 and YE2021 because of a reduction in base rental income. The contraction in rental income, likely a result of tenant abatements and rent relief, is expected to be temporary. Given the loan’s low leverage (DBRS Morningstar loan-to-value (LTV) and DBRS Morningstar Balloon LTV of 17.2% and 12.9%, respectively), strong historical performance, and consistent occupancy rate, DBRS Morningstar maintained the investment-grade shadow rating on the loan with this review.

In addition to Turner Towers, DBRS Morningstar shadow-rated The Grace Building (Prospectus ID#4, 8.7% of the pool) and McDonald’s Global HQ (Prospectus ID#6, 5.3% of the pool) as investment grade at issuance. With this review, DBRS Morningstar confirms the performance for these loans remains in line with the investment-grade shadow ratings.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

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/396929.

Classes X-A, X-B, X-D, X-F, X-G, X-H, X-J, and X-K 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 this transaction.

The DBRS Viewpoint platform provides additional information on this transaction and underlying loan 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.

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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