DBRS Morningstar Confirms All Classes of Citigroup Commercial Mortgage Trust 2019-GC41

DBRS, Inc. (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass-Through Certificates, Series 2019-GC41 issued by Citigroup Commercial Mortgage Trust 2019-GC41 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-5 at AAA (sf)
-- Class A-AB at AAA (sf)
-- Class AS at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (high) (sf)
-- Class X-B at AA (low) (sf)
-- Class C at A (high) (sf)
-- Class D at BBB (high) (sf)
-- Class X-D at BBB (high) (sf)
-- Class E at BBB (sf)
-- Class X-F at BBB (low) (sf)
-- Class F at BB (high) (sf)
-- Class G-RR at B (high) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since DBRS Morningstar’s last review. As of the April 2022 remittance, all loans remain in the pool with an aggregate principal balance of $1.27 billion, representing a collateral reduction of 0.4% since issuance. Nine loans, representing 20.6% of the pool balance, were on the servicer's watchlist, and there was one loan, representing 0.6% of the pool, in special servicing. The watchlisted loans include three loans backed by hotel properties and one loan collateralized by a specialty retail property. All four of these loans have been affected by the Coronavirus Disease (COVID-19) pandemic, but all have recently shown performance improvements, with only one reporting a debt service coverage ratio (DSCR) below breakeven as of the most recent reporting period. The pool is concentrated with loans backed by office and retail properties, which represent 33.4% and 16.3% of the pool, respectively.

Four loans, representing a combined 18.0% of the pool, are shadow-rated investment grade by DBRS Morningstar, including 30 Hudson Yards, Grand Canal Shoppes, Moffett Towers II Buildings 3 and 4, and The Centre. With this review, DBRS Morningstar maintains that the loans continue to perform in line with the investment-grade shadow ratings.

The largest loan on the servicer’s watchlist, Millennium Park Plaza (Prospectus ID#2, 5.5% of the pool), represents a $70.0 million participation in a $210.0 million interest only (IO) whole loan. The loan is secured by the borrower’s fee-simple interest in a 38-story high-rise consisting of 561 multifamily units, 85,017 square feet (sf) of office space, and 18,450 sf of retail space on Michigan Avenue, in Chicago’s Loop submarket. The YE2021 financials reported a DSCR of 0.95 times (x), compared with the YE2020 DSCR of 1.56x and the issuer’s DSCR of 1.72x. The property is well occupied, but revenue collections were down significantly in 2021, contributing to the low DSCR and the loan’s placement on the servicer’s watchlist. According to the January 2022 rent roll, the residential units were 99.8% occupied, while the commercial units were 88.4% occupied by sf compared with the occupancy rate of 85.0% reported by the servicer for the property as a whole at YE2020. According to Reis, the subject’s East Loop submarket reported a Q1 2022 office vacancy rate of 13.9% and the subject’s Loop submarket reported a Q1 2022 apartment vacancy rate of 10.7%, suggesting that the property is operating relatively in line with market. As noted at issuance, the property does have significant rollover exposure in the first five years of the loan term, but that risk is generally mitigated by the granularity of the rent roll, with just two tenants occupying more than 5,000 sf across the office and retail components of the property.

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 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 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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