DBRS Morningstar Confirms All Classes of Benchmark 2019-B15 Mortgage Trust

DBRS, Inc. (DBRS Morningstar) confirmed its ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2019-B15 issued by Benchmark 2019-B15 Mortgage Trust:

-- 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-5 at AAA (sf)
-- Class A-AB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class D at BBB (high) (sf)
-- Class X-D at BBB (sf)
-- Class E at BBB (low) (sf)
-- Class X-F at BB (sf)
-- Class F at BB (low) (sf)
-- Class G-RR at B (high) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance when the transaction consisted of 32 fixed-rate loans secured by 87 commercial and multifamily properties. As of the July 2022 remittance report, all 32 of the original loans remain in the pool with a current balance of $838.8 million, representing a nominal collateral reduction of 0.9% since issuance. The transaction is concentrated by property type as eight loans, representing approximately 37.0% of the current trust balance, are secured by office collateral; mixed-use properties back the second-largest concentration of loans, with eight loans representing approximately 30.0% of the current trust balance. As of the July 2022 remittance, eight loans are on the servicer’s watchlist and one loan is in special servicing, representing 30.7% and 2.3% of the pool balance, respectively.

The second-largest loan on the servicer’s watchlist is Kildeer Village Square (Prospectus ID#6; 5.7% of the pool), secured by a nearly 200,000 square foot anchored retail center in Kildeer, Illinois, approximately 30 miles northwest of Chicago. The loan has been on the servicer’s watchlist since April 2020 when the former largest tenant, Art Van Furniture (20.4% of the net rentable area (NRA)), vacated the subject after filing for bankruptcy. The loan is structured with a cash flow sweep upon the departure of Art Van Furniture; according to the July 2022 servicer loan level reserve report, the loan reported a lockbox reserve with a balance of $106,000 in addition to leasing and replacement reserves totaling approximately $256,000. Although the space has yet to be backfilled, the borrower has submitted a lease for servicer approval, which is currently pending.

According to the December 2021 rent roll, the property was 79.6% occupied with the largest tenants being Nordstrom Rack (16.6% of NRA) and Sierra Trading Post (10.8% of NRA). No other tenant represents more than 8.6% of NRA. Aside from the departure of Art Van Furniture, the loan is currently being monitored on the servicer’s watchlist for a low YE2021 debt service coverage ratio (DSCR), which was reported at 0.99 times (x), compared with 1.89x at issuance. The property is relatively new and modern (built in 2017) and is an attractive development that should fare better than other spaces in the area that are also trying to backfill vacant boxes, with its superior location along a heavily traveled thoroughfare within a middle- to upper-middle-class area in Chicago’s northwest suburbs.

The Hilton Cincinnati Netherland Plaza (Prospectus ID#18; 2.3% of pool), secured by a 561-key full-service hotel in Cincinnati, transferred to special servicing in February 2021 for imminent monetary default as a result of disruptions from the Coronavirus Disease (COVID-19) pandemic; however, the loan has been brought current and the borrower is currently in discussions with the servicer to settle the outstanding penalty fees that remain.

An updated STR, Inc. (STR) report was not provided, but the servicer reported YE2021 occupancy, average daily rate (ADR), and revenue per available room (RevPAR) of 41.6%, $144.00, and $59.95, respectively, showing improving performance when compared with the YE2020 RevPAR of $30.17, but still significantly below the pre-pandemic YE2019 RevPAR of $113.00. The property’s website showed room rates of more than $230 per night for near-term bookings as of an August 2022 online search conducted by DBRS Morningstar, suggesting that demand has continued to improve since the YE2021 reporting. According to the YE2021 reporting, the loan reported a DSCR of 0.53x, which was an improvement from the YE2020 DSCR of -0.70x, but well below the issuer’s DSCR of 1.62x. Based on the April 2021 appraisal, the property was valued at $86.0 million, an 18.1% decline from the issuance value of $105.0 million but above the whole-loan balance of $69.8 million.

At issuance, DBRS Morningstar shadow-rated the Century Plaza Towers (Prospectus ID#3; 7.4% of the pool), The Essex (Prospectus ID#14; 2.9% of pool), and Osborn Triangle (Prospectus ID#16; 2.4% of pool) loans as investment-grade. As performance metrics for each of the three loans remain in line with expectations, DBRS Morningstar maintained the shadow rating on all three loans with this review.

ENVIRONMENTAL, SOCIAL, AND 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, and X-F 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 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 the 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 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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