DBRS Morningstar Confirms Ratings on All Classes of Citigroup Commercial Mortgage Trust 2019-C7

DBRS Limited (DBRS Morningstar) confirmed its ratings on the following Commercial Mortgage Pass-Through Certificates, Series 2019-C7 issued by Citigroup Commercial Mortgage Trust 2019-C7:

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

All trends are Stable. Additionally, DBRS Morningstar removed the Interest in Arrears designation on Class J-RR.

The rating confirmations reflect the overall stable performance of the underlying loans in the transaction, which remain in line since DBRS Morningstar’s last review. According to the June 2022 reporting, the current pool balance is $1.26 billion, reflecting minimal collateral reduction of 0.7% since issuance as all of the original 55 fixed-rate loans remain in the pool. Additionally, there are no specially serviced or defeased loans in the pool. There are 12 loans, representing 26.6% of the current pool balance, on the servicer’s watchlist for a variety of reasons, including low occupancy and low debt service coverage ratio (DSCR).

The Courtyard by Marriott New Haven Orange/Milford loan (Prospectus ID#41; 0.8% of the pool), is secured by a 121-key limited-service hotel in Orange, Connecticut. The loan transferred to special servicing in July 2020 because of monetary default as a result of cash flow disruptions resulting from the Coronavirus Disease (COVID-19) pandemic. Since then, the borrower has been granted a modification and has brought the loan payments current, and the loan was returned to the master servicer in October 2021. However, as of June 2022, the loan is being monitored on the servicer’s watchlist for low DSCR.

The 805 3rd Avenue (Prospectus ID#3, 4.4% of the pool) loan is secured by a 29-story, 596,100 square foot Class A office property within the Plaza District submarket. The loan has been on the servicer’s watchlist since August 2020, after the borrower requested pandemic relief. Payment relief was provided in the form of a Consent agreement that allowed the Borrower to make interest-only (IO) payments and waive the tax escrow payments through September 2020. According to the servicer, the borrower has been making payments as per the agreement. The property benefits from a diverse tenant roster, across a variety of industries, including a sports TV network, a private equity firm, and a permanent mission to the United Nations, among others. According to the YE2021 reporting, the property was 80.9% occupied with a net cash flow (NCF) of $10.9 million (with a DSCR of 1.90 times (x)), in comparison with the YE2020 figures of 80.5% and $16.9 million (with a DSCR of 2.82x), respectively. While occupancy has remained flat year over year, the decline in NCF is predominantly due to a decrease in rental income. DBRS Morningstar asked the servicer about the 2021 revenue decline, and a response is pending as of the date of this press release.

At issuance, DBRS Morningstar assigned an investment-grade shadow rating on 650 Madison Avenue (Prospectus ID#2, 4.4% of the pool) and 805 3rd Avenue. Despite the performance decline of 805 3rd Avenue, the property’s diverse and granular tenant roster, strong sponsorship, and excellent location, are mitigants against the property’s increased credit risk because DBRS Morningstar believes performance will rebound to pre-pandemic levels in the near to medium term. With this review, DBRS Morningstar confirms that the performance of these loans remain consistent with investment-grade characteristics.

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, X-G, and X-H 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/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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