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Rating Action:

Moody's affirms seven classes of BANK 2019-BNK16

27 Aug 2021

Approximately $742 million of structured securities affected

New York, August 27, 2021 -- Moody's Investors Service, ("Moody's") has affirmed the ratings on seven classes in BANK 2019-BNK16, Commercial Mortgage Pass-Through Certificates, Series 2019-BNK16 as follows:

Cl. A-1, Affirmed Aaa (sf); previously on Feb 26, 2019 Definitive Rating Assigned Aaa (sf)

Cl. A-2, Affirmed Aaa (sf); previously on Feb 26, 2019 Definitive Rating Assigned Aaa (sf)

Cl. A-SB, Affirmed Aaa (sf); previously on Feb 26, 2019 Definitive Rating Assigned Aaa (sf)

Cl. A-3, Affirmed Aaa (sf); previously on Feb 26, 2019 Definitive Rating Assigned Aaa (sf)

Cl. A-4, Affirmed Aaa (sf); previously on Feb 26, 2019 Definitive Rating Assigned Aaa (sf)

Cl. A-S, Affirmed Aa3 (sf); previously on Feb 26, 2019 Definitive Rating Assigned Aa3 (sf)

Cl. X-A*, Affirmed Aaa (sf); previously on Feb 26, 2019 Definitive Rating Assigned Aaa (sf)

* Reflects interest-only classes

RATINGS RATIONALE

The ratings on the P&I classes were affirmed due to their credit support and because the transaction's key metrics, including Moody's loan-to-value (LTV) ratio, Moody's stressed debt service coverage ratio (DSCR) and the transaction's Herfindahl Index (Herf), are within acceptable ranges.

The rating on the IO class was affirmed based on the credit quality of its referenced classes.

Moody's rating action reflects a base expected loss of 6.4% of the current pooled balance. Moody's provides a current list of base expected losses for conduit and fusion CMBS transactions on moodys.com at http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF215255.

FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS:

The performance expectations for a given variable indicate Moody's forward-looking view of the likely range of performance over the medium term. Performance that falls outside the given range can indicate that the collateral's credit quality is stronger or weaker than Moody's had previously expected.

Factors that could lead to an upgrade of the ratings include a significant amount of loan paydowns or amortization, an increase in the pool's share of defeasance or an improvement in pool performance.

Factors that could lead to a downgrade of the ratings include a decline in the performance of the pool, loan concentration, an increase in realized and expected losses from specially serviced and troubled loans or interest shortfalls.

METHODOLOGY UNDERLYING THE RATING ACTION

The principal methodology used in rating all classes except interest-only classes was "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in September 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1244778. The methodologies used in rating interest-only classes were "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in September 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1244778 and "Moody's Approach to Rating Structured Finance Interest-Only (IO) Securities" published in February 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1111179. Please see the list of ratings at the top of this announcement to identify which classes are interest-only (indicated by the *). Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

Please note that a Request for Comment was published in which Moody's requested market feedback on potential revisions to one or more of the methodologies used in determining these Credit Ratings. If the revised methodologies are implemented as proposed, the Credit Ratings referenced in this press release might be positively affected. Request for Comments can be found on the rating methodologies page on www.moodys.com.

DEAL PERFORMANCE

As of the August 17, 2021 distribution date, the transaction's aggregate certificate balance has decreased by 1% to $965 million from $975 million at securitization. The certificates are collateralized by 69 mortgage loans ranging in size from less than 1% to 7% of the pool, with the top ten loans (excluding defeasance) constituting 50% of the pool. Two loans, constituting 9% of the pool, have investment-grade structured credit assessments. The pool also contains twelve low leverage cooperative loans, constituting 4% of the pool balance, that were too small to credit assess; however, have Moody's leverage that is consistent with other loans previously assigned an investment grade Structured Credit Assessments.

Moody's uses a variation of Herf to measure the diversity of loan sizes, where a higher number represents greater diversity. Loan concentration has an important bearing on potential rating volatility, including the risk of multiple notch downgrades under adverse circumstances. The credit neutral Herf score is 40. The pool has a Herf of 29, the same as at securitization.

As of the August 2021 remittance report, all loans were classified as current on their debt service payments.

Twelve loans, constituting 10% of the pool, are on the master servicer's watchlist, of which one loan, representing 2% of the pool, indicate the borrower has received loan modifications in relation to coronavirus impact on the property. The watchlist includes loans that meet certain portfolio review guidelines established as part of the CRE Finance Council (CREFC) monthly reporting package. As part of Moody's ongoing monitoring of a transaction, the agency reviews the watchlist to assess which loans have material issues that could affect performance.

No loans have been liquidated from the pool. One loan, the Southeast Hotel Portfolio ($67.5 million -- 7.0% of the pool), is currently in special servicing. The loan is secured by a portfolio of five hotels, consisting of 759-keys, located across three states: Georgia, Florida, and North Carolina. Four of the hotels operate under limited/select-service brands and one operates under a full-service brand. The loan transferred to special servicing in March 2020 as the property's operations were significantly impacted by the coronavirus pandemic. In 2020, the property did not generate enough net cash flow (NCF) to cover operating expenses and a forbearance agreement was executed in April 2020. Following the execution, an extension was granted, an amendment was executed in November 2020, and the servicer is currently discussing a second amendment with the borrower. As of the August 2021 remittance report, the loan was last paid through its June 2021 payment date, however, the loan is classified as current as the loan is performing under the terms of the Forbearance agreement.

Moody's has also assumed a high default probability for four poorly performing loans, constituting 3% of the pool. The largest troubled loan is the Courtyard Fredericksburg Loan ($12.0 million -- 1.2% of the pool), which is secured by a 98-key, limited service hotel located in Fredericksburg, Virginia. The property did not generate enough NCF in 2020 to cover its operating expenses.

The remaining troubled loans each represents less than 1% of the pool and are secured by retail, office, and hotel properties that have experienced significant cash flow declines since securitization. Moody's has estimated an aggregate loss of $21.4 million (a 22% expected loss on average) from the specially serviced and troubled loans.

The credit risk of loans is determined primarily by two factors: 1) Moody's assessment of the probability of default, which is largely driven by each loan's DSCR, and 2) Moody's assessment of the severity of loss upon a default, which is largely driven by each loan's loan-to-value ratio, referred to as the Moody's LTV or MLTV. As described in the CMBS methodology used to rate this transaction, we make various adjustments to the MLTV. We adjust the MLTV for each loan using a value that reflects capitalization (cap) rates that are between our sustainable cap rates and market cap rates. We also use an adjusted loan balance that reflects each loan's amortization profile. The MLTV reported in this publication reflects the MLTV before the adjustments described in the methodology.

Moody's received full year 2019 operating results for 94% of the pool, and full or partial year 2020 operating results for 96% of the pool (excluding specially serviced and defeased loans). Moody's weighted average conduit LTV is 116%, unchanged from securitization. Moody's conduit component excludes loans with structured credit assessments, defeased and CTL loans, and specially serviced and troubled loans. Moody's NCF reflects a weighted average haircut of 20% to the most recently available net operating income (NOI). Moody's value reflects a weighted average capitalization rate of 9.9%.

Moody's actual and stressed conduit DSCRs are 1.60X and 0.94X, respectively, compared to 1.59X and 0.95X at securitization. Moody's actual DSCR is based on Moody's NCF and the loan's actual debt service. Moody's stressed DSCR is based on Moody's NCF and a 9.25% stress rate the agency applied to the loan balance.

The largest loan with a structured credit assessment is the Millennium Partners Portfolio Loan ($65.0 million -- 6.7% of the pool), which represents a pari passu portion of a $472 million senior mortgage loan. The property is also encumbered with $238 million in subordinate debt and $280 million in mezzanine financing. The loan is secured by the borrowers' condominium interests in eight Class A properties located in New York City (three assets), Washington D.C (two), Boston (one), San Francisco (one), and Miami (one). In aggregate, the collateral improvements contain 1.5 million square feet (SF) of retail, office and/or parking area. The portfolio is leased to a combination of national retail tenants including Equinox sports clubs, AMC Loews movie theaters, Primark, and Zara along with office tenants including Havas and HSBC. As of March 2021, the portfolio was 100% leased, the same as in December 2019 and December 2018. As of March 2021, the annualized NOI DSCR was 2.12X, compared to 1.97X in December 2019 and 2.57X in 2019. The loan is current as of the August 2021 payment date and the properties are located in highly desirable locations in markets with high barriers to entry. This loan is interest-only throughout the ten-year term. Moody's structured credit assessment and stressed DSCR on the pooled senior note are aa3 (sca.pd) and 1.42X, respectively.

The second loan with a structured credit assessment is the Willowbend Apartments Loan ($23.9 million -- 2.5% of the pool), which is secured by a 330-unit, garden-style multifamily complex located in Sunnyvale, California. Amenities include a clubhouse, fitness center, swimming pool, and playground. The property's NOI has declined since securitization due primarily to higher operating expenses and the June 2021 annualized NOI DSCR was 3.36X. compared to 4.40X in 2020 and 4.09X in 2019. However, the property has recently experienced an uptick in occupancy and was 98% leased as of June 2021, compared to 89% in 2020 and 95% in 2019. The property benefits from its proximity to approximately 19 million SF of Class A office space located within a 3-mile radius of the property. Moody's structured credit assessment and stressed DSCR are aaa (sca.pd) and 2.54X, respectively.

The top three conduit loans represent 18% of the pool balance. The largest loan is the One AT&T Loan ($71.5 million -- 7.4% of the pool), which represents a pari passu portion of a $131.5 million senior mortgage loan. The loan is secured by a 965,800 SF, Class A office building located in the central business district (CBD) of Dallas, Texas. The property has been 100% leased to AT&T since securitization on a triple-net lease that expires in December 2031. The property has served as AT&T's global headquarters since 2008 and the lease does not contain any early termination options. This loan is interest-only throughout the ten-year term. Due to the single tenant exposure, Moody's valuation reflects a lit/dark analysis. Moody's LTV and stressed DSCR are 123% and 0.92X, respectively, unchanged from securitization.

The second largest loan is the ExchangeRight Net Leased Portfolio #25 Loan ($52.3 million -- 5.4% of the pool), which is secured by a 379,202 SF portfolio of 21 single-tenant retail and medical office properties located across 10 states. The portfolio contains approximately 92% of retail space based on square footage and 8% of medical office space. As of March 2021, the portfolio was 100% leased, unchanged from 2019. Financial performance has been stable since securitization. Additionally, the portfolio benefits from long term leases with the earliest lease expiration in 2027. The loan is interest only and Moody's LTV and stressed DSCR are 112% and 0.89X, respectively, unchanged from securitization.

The third largest loan is the Shadow Mountain Marketplace Loan ($49.4 million -- 5.1% of the pool), which is secured by a 200,703 SF anchored retail center located in Las Vegas, Nevada. The property is anchored by Best Buy (22% of NRA; lease expiration in March 2023), Ashley Furniture (18% of NRA; lease expiration in March 2024), and Seafood City Supermarket (14% of NRA; lease expiration in December 2028). The property is also shadow anchored by a non-collateral corporate-owned Costco. As of June 2021, the property was 99% leased, unchanged from 2019. Financial performance is stable and as of June 2021, the NOI DSCR was 1.67X compared to 1.76X in 2020 and 1.65X in 2019. The loan remains within its initial 3-year interest only period and beings amortizing in March 2022. Moody's LTV and stressed DSCR are 122% and 0.82X, respectively, unchanged from securitization.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

The analysis includes an assessment of collateral characteristics and performance to determine the expected collateral loss or a range of expected collateral losses or cash flows to the rated instruments. As a second step, Moody's estimates expected collateral losses or cash flows using a quantitative tool that takes into account credit enhancement, loss allocation and other structural features, to derive the expected loss for each rated instrument.

Moody's did not use any stress scenario simulations in its analysis.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288435.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Seth Glanzman
Associate Lead Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Matthew Halpern
VP - Senior Credit Officer
Structured Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
© 2022 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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