PRESALE REPORT Citigroup Commercial Mortgage Trust 2019-C7ireportscdn.dbrs.com/presale_reports/CGCMT...

D E C E M B E R 2 0 1 9 S T R U C T U R E D F I N A N C E : C M B S

Citigroup Commercial Mortgage Trust 2019-C7

P R E S A L E R E P O R T

https://viewpoint.dbrs.com/#!/a/deal/CGCMT%202019-C7?p=0

Table of Contents

Capital Structure 3Transaction Summary 4Rating Considerations 5DBRS Morningstar Credit Characteristics 7Largest Loan Summary 8DBRS Morningstar Sample 10Transaction Concentrations 13Loan Structural Features 14

490-504 Myrtle Avenue 18650 Madison Avenue 23805 3rd Avenue 27East Village Multifamily Portfolio Pool 2 32405 E 4th Avenue 36Gartner Campus South 40Harvey Building Products 44Marriott Phoenix Airport 50Austin Landing Mixed-Use 55Giant Anchored Portfolio 60East Village Multifamily Portfolio Pool 1 66Park Central Tower 70Shoppes at Parma 76

Transaction Structural Features 81Methodologies 83Surveillance 83Glossary 84Definitions 84

Kevin MammoserManaging Director+1 312 [email protected]

Walter JohnstonVice President+1 646 [email protected]

Erin StaffordManaging Director+1 312 [email protected]

Greg HaddadSenior Vice President+1 646 [email protected]

December 2019 3

Presale Report | CGCMT 2019-C7

Capital Structure

Description Rating Action Balance ($) Subordination (%) DBRS Morningstar Rating

Trend

Class A-1 New Rating – Provisional 23,936,000 30.000 AAA (sf) Stable




Class A-AB New Rating – Provisional 45,958,000 30.000 AAA (sf) Stable

Class A-S New Rating – Provisional 69,898,000 23.625 AAA (sf) Stable

Class X-A New Rating – Provisional 837,411,000 - AAA (sf) Stable

Class B New Rating – Provisional 50,711,000 19.000 AAA (sf) Stable

Class C New Rating – Provisional 53,452,000 14.125 A (high) (sf) Stable

Class X-B New Rating – Provisional 104,163,000 - AA (low) (sf) Stable

Class D New Rating – Provisional 34,264,000 11.000 BBB (high) (sf) Stable

Class E New Rating – Provisional 28,782,000 8.375 BBB (low) (sf) Stable

Class X-D New Rating – Provisional 63,046,000 BBB (sf) Stable

Class F New Rating – Provisional 15,076,000 7.000 BB (high) (sf) Stable

Class X-F New Rating – Provisional 15,076,000 - BBB (low) (sf) Stable

Class G New Rating – Provisional 13,705,000 5.750 BB (high) (sf) Stable

Class X-G New Rating – Provisional 13,705,000 - BBB (low) (sf) Stable

Class H New Rating – Provisional 12,335,000 4.625 B (high) (sf) Stable

Class X-H New Rating – Provisional 12,335,000 - BB (low) (sf) Stable

Class J-RR New Rating – Provisional 17,818,000 3.000 B (low) (sf) Stable

Class K-RR NR - - NR n/a

Class VRR NR - - NR n/a

Class S NR - - NR n/a

Class R NR - - NR n/a

Notes:1. NR = Not Rated.2. The Class X-B, X-D, D, E, F, G, H, J-RR, K-RR, VRR, S, and R Interest will be privately placed.3. The exact initial certificate balances of the Class A-3 and A-4 certificates will be determined based on the final pricing of those classes of certificates. The aggregate initial

certificate balance of the Class A-3 and A-4 certificates is expected to be approximately $654,619,000, subject to a variance of plus or minus 5%.4. The notional amount of each class of the Class X Certificates will be equal to the certificate balance or the aggregate of the certificate balances, as applicable, from time

to time of the class or classes of the Nonvertically Retained Principal Balance Certificates identified as such class of the Class X Certificates. The notional amount of the Class X-A certificates will be equal to the aggregate balance of the Class A-1, A-2, A-3, A-4, A-AB, and A-S certificates. The notional amount of the Class X-B certificates will be equal to the aggregate balance of the Class B and C certificates. The notional amount of the Class X-D certificates will be equal to the aggregate balance of the Class D and E certificates.

5. The Class X-A, X-B, X-D, X-F, X-G, and X-H balances are IO certificates that reference a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated reference tranche adjusted upward by one notch if senior in the waterfall. All Class X Certificates are paid at the top of the waterfall along with the Class A-1, A-2, A-3, A-4, and A-AB certificates.

December 2019 4


Transaction Summary

POOL CHARACTERISTICS

Trust Amount $1,139,147,570 Wtd. Avg. Interest Rate 3.925%

Number of Loans 55 Wtd. Avg. Remaining Term 117

Number of Properties 113 Wtd. Avg. Remaining Amortization 375

Average Loan Size $20,711,774 Total DBRS Morningstar Expected Amortization1

-6.6%

DBRS Morningstar Issuance LTV 63.3% DBRS Morningstar Balloon LTV 58.9%

Appraised Issuance LTV 61.8% Average Appraised Balloon LTV 57.6%

Wtd. Avg. DBRS Morningstar DSCR 1.77 Wtd. Avg. Issuer Term DSCR 2.00x

Top Ten Loan Concentration 34.8% Avg. DBRS Morningstar NCF Variance -11.6%

1. For certain ARD loans, expected amortization may include amortization expected to occur after the ARD but prior to single/major tenant expiry.

PARTICIPANTS

Depositor Citigroup Commercial Mortgage Securities Inc.

Mortgage Loan Sellers Citi Real Estate Funding Inc. Ladder Capital Finance, LLC Starwood Mortgage Capital LLCRialto Mortgage Finance, LLC

Master Servicer Wells Fargo Bank, National Association

Special Servicer LNR Partners, LLC

Certficate Administrator Citibank, N.A.

Trustee Wilmington Trust, National Association

Operating Advisor Pentalpha Surveillance, LLC

December 2019 5


Rating Considerations

The collateral consists of 55 fixed-rate loans secured by 113 commercial and multifamily properties. The transaction is a sequential-pay pass-through structure. DBRS Morningstar analyzed the conduit pool to determine the provisional ratings, reflecting the long-term probability of loan default within the term and its liquidity at maturity. Two loans represent-ing approximately a combined 8.8% of the pool have investment-grade shadow ratings from DBRS Morningstar. Based on the cutoff loan balances against the DBRS Morningstar Stabilized NCF and their respective actual constants, five loans, representing a combined 5.1% of the pool, had a DBRS Morningstar Term DSCR below 1.32x, a threshold indicative of a higher likelihood of midterm default. The pool additionally includes 16 loans (representing a combined 27.9% of the pool by allocated loan balance) with issuance LTVs exceeding 67.1%, a threshold historically indicative of above-average default frequency. The WA LTV of the pool at issuance is 61.8%, and the pool will amortize down to a WA LTV of 57.6% at maturity.

STRENGTHS – The collateral features two loans, representing a combined 8.8% of the pool, that have investment-grade shadow ratings from DBRS Morningstar: 650 Madison and 805 3rd Avenue. The 650 Madison loan exhibits credit characteristics consistent with a BBB (low) shadow rating, and 805 3rd Avenue exhibits credit characteristics consistent with a BBB shadow rating. For more information on these two loans, please see pages 23 and 27, respectively.

– Of the loans sampled, 12, representing 55.2% of the sample, have either Average (+) or Above Average property quality. Additionally, only four loans, representing 13.5% of the sampled loans, have Average (-) or Below Average property quality. The properties securing the three largest loans in the pool, all with identical balances representing 4.4% of the pool balance each, are Average (+).

– Term default risk is relatively low, as evidenced by a relatively strong WA DBRS Morningstar Amortizing DSCR of 1.77x. Across the pool, the DBRS Morningstar DSCRs range from 1.15x to 2.53x, and only five loans, representing 5.1% of the pool by allocated loan balance, exhibit a DBRS Morningstar DSCR below 1.32x, a threshold generally associated with above-average default frequency. Additionally, 25 loans, representing 46.7% of the pool balance, have a DBRS Morningstar DSCR above 1.69x, a threshold generally associated with below-average default frequency.

– The pool is relatively granular and does not exhibit significant loan size concentration. No loan represents more than 4.4% of the pool cutoff balance, and the top 10 loans represent only 38.2% of the loan balance. The balances of the 55 loans are more evenly distributed than average, which is evidenced by the effective loan count of 36.0. Additionally, no property type comprises more than 30% of the pool by cutoff balance.

CHALLENGES AND CONSIDERATIONS – The pool exhibits some leverage barbelling. While the pool has six loans, representing 13.1% of the pool balance, which have an issuance LTV below 59.3%, a threshold historically indicative of relatively low-leverage financing and generally associated with below-average default frequency, there are also 16 loans, representing 27.9% of the pool balance, which have an issuance LTV above 67.1%, a threshold historically indicative of relatively high-leverage financing and generally associated with above-average default frequency.

– Only two of the identified high-leverage loans exhibit a DBRS Morningstar DSCR of less than 1.32x, a threshold generally associated with above-average default frequency. These loans exhibited a WA expected loss of 6.8%, which is considerably higher than the WA expected loss of the overall pool. As a result, DBRS Morningstar reflects the risk of these loans in the credit enhancement levels of the pool.

– The pool features a relatively high concentration of loans secured by properties in less favorable suburban market areas. Thirty loans, representing 46.9% of the pooled cutoff balance, are secured by properties predominately in areas with a DBRS Morningstar Market Rank of either 3 or 4.

December 2019 6


– The WA DBRS Morningstar DSCR of these loans is still relatively high at 1.87x. Additionally, most of these loans have at least some amortization during the term and exhibit a WA amortization of 11.9%, which is almost twice the pool WA amortization of 6.6%.

– The pool also has 13 loans, representing 31.2% of the cutoff pool balance, that are in urban areas with a DBRS Morningstar Market Rank of 7 or 8.

– Twenty-eight loans, representing a combined 55.5% of the cutoff pool balance, have full-term IO periods, and an additional 15 loans, representing 26.7% of the pooled cutoff balance, have partial IO terms ranging from 12 to 60 months.

– The loans with full-term IO periods are, for the most part, preamortized, as is evidenced by a DBRS Morningstar WA Issuance LTV of 59.6%.

– Nine loans have sponsors that are either Weak or Litigious. These loans make up 15.6% of the transaction by cutoff balance.

– The sample also contains three loans that have Strong sponsors, which make up to 10.4% of the transaction.

December 2019 7


DBRS Morningstar Credit Characteristics

DBRS MORNINGSTAR TERM DSCR DBRS MORNINGSTAR ISSUANCE LTV

DSCR (x)% of the Pool

(Trust Balance1) ISSUANCE LTV (%)% of the Pool

(Trust Balance1)

0.00-0.90 0.0 0.0-50.0 9.2

0.90-1.00 0.0 50.0-55.0 3.9

1.00-1.15 0.0 55.0-60.0 2.8

1.15-1.30 3.6 60.0-65.0 40.7

1.30-1.45 14.8 65.0-70.0 27.3

1.45-1.60 20.9 70.0-75.0 12.7

1.60-1.75 16.2 >75.0 3.5

>1.75 44.5 WA Issuance LTV (%) 63.3

WA DSCR (x) 1.77

DBRS MORNINGSTAR BALLOON LTV

Balloon LTV (%)% of the Pool

(Trust Balance1)

0.0-50.0 15.9

50.0-55.0 16.2

55.0-60.0 10.8

60.0-65.0 31.7

65.0-70.0 21.7

70.0-75.0 3.7

>75.0 0.0

WA Baloon LTV (%) 58.7

1. Includes pari passu debt, but excludes subordinate debt.

December 2019 8


Largest Loan Summary

LOAN DETAIL

Loan NameTrust Balance

($) % of Pool

DBRS Morningstar

Shadow Rating

Issuance Appraised

LTV (%)

DBRS Morningstar

NCF DSCR (x)

DBRS Morningstar

NCF Debt Yield (%)

490-504 Myrtle Avenue 50,000,000 4.4 n/a 60.2 1.77 6.8

650 Madison Avenue 50,000,000 4.4 BBB (low) 48.5 2.45 6.4

805 3rd Avenue 50,000,000 4.4 BBB 32.6 2.39 5.3

East Village Multifamily Portfolio Pool 2 45,107,662 4.0 n/a 65.7 1.62 6.2

405 E 4th Ave 42,500,000 3.7 n/a 63.6 1.94 7.1

Gartner Campus South 40,290,000 3.5 n/a 60.0 2.24 8.2

Harvey Building Products 40,000,000 3.5 n/a 68.8 1.35 7.5

Marriott Phoenix Airport 40,000,000 3.5 n/a 52.6 1.68 10.4

Austin Landing Mixed-Use 38,750,000 3.4 n/a 61.9 2.13 7.6

Giant Anchored Portfolio 38,500,000 3.4 n/a 74.3 1.36 7.7

East Village Multifamily Portfolio Pool 1 36,483,246 3.2 n/a 65.1 1.64 6.3

Alrig Portfolio 35,000,000 3.1 n/a 67.7 1.51 8.7

Park Central Tower 35,000,000 3.1 n/a 57.9 1.35 7.7

Shoppes at Parma 35,000,000 3.1 n/a 65.4 1.57 9.2

Town Center at Sterling 33,600,000 2.9 n/a 74.7 1.60 9.0

PROPERTY DETAIL

Loan NameDBRS Morningstar

Property Type City StateYear Built

SF/ Units

Loan per SF/Units

($)Maturity Balance per SF/Units ($)

490-504 Myrtle Avenue Multifamily Brooklyn NY 2015 236 360,169 360,169

650 Madison Avenue Mixed Use New York NY 1957 600,415 1,332 1,332

805 3rd Avenue Office New York NY 1982 596,100 461 461

East Village Multifamily Portfolio Pool 2 Multifamily New York NY 1910 109 413,832 413,832

405 E 4th Ave Office San Mateo CA 2019 71,254 877 877

Gartner Campus South Office Fort Myers FL 2018 251,949 160 160

Harvey Building Products Industrial Various Various 1988 2,046,119 78 71

Marriott Phoenix Airport Full Service Hotel Phoenix AZ 1999 345 115,942 87,773

Austin Landing Mixed-Use Mixed Use Miamisburg OH 2010 834,510 138 129

Giant Anchored Portfolio Retail Various Various 2001 548,482 177 160

East Village Multifamily Portfolio Pool 1 Multifamily New York NY 1908 73 499,770 499,770

Alrig Portfolio Office Various MI 1993 584,741 85 73

Park Central Tower Office Dallas TX 1975 668,154 90 76

Note: Loan metrics are based on whole-loan balances.

December 2019 9


PROPERTY DETAIL

Loan NameDBRS Morningstar

Property Type City StateYear Built

SF/ Units

Loan per SF/Units

($)Maturity Balance per SF/Units ($)

Shoppes at Parma Retail Parma OH 1955 726,275 79 63

Town Center at Sterling Retail Sterling VA 1973 183,570 183 158

Note: Loan metrics are based on whole-loan balances.

December 2019 10


DBRS Morningstar Sample

DBRS MORNINGSTAR SAMPLE RESULTS

Prospectus ID Loan Name % of Pool

DBRS Morningstar

NCF ($)

DBRS MORN NCF

Variance (%)

DBRS Morningstar Major Variance Drivers

DBRS Morningstar

Property Quality

1 490-504 Myrtle Avenue 4.4 5,789,582 -7.5 Payroll, Vacancy, Other Income

Average (+)

2 650 Madison Avenue 4.4 50,846,168 -10.4 TI/LC, Vacancy Average (+)

3 805 3rd Avenue 4.4 14,695,510 -13.2 TI/LC, GPR Average (+)

4 East Village Multifamily Portfolio Pool 2 4.0 2,798,656 -6.8 Vacancy, OpEx Average (-)

5 405 E 4th Avenue 3.7 4,452,730 -10.5 Vacancy, TI/LC Above Average

6 Gartner Campus South 3.5 3,294,922 -12.8 TI/LC, Vacancy Above Average

7 Harvey Building Products 3.5 12,077,127 -10.8 TI/LCs, Vacancy, Replacement Reserves

Average

8 Marriott Phoenix Airport 3.5 4,140,298 -15.6 RevPAR, F&B Revenue Above Average

9 Austin Landing Mixed-Use 3.4 8,730,949 -18.4 Mark to Market, TI/LC, Vacancy

Average (+)

10 Giant Anchored Portfolio 3.4 7,463,105 -10.2 Mark to Market Adjustment, TI/LC, Vacancy

Average

11 East Village Multifamily Portfolio Pool 1 3.2 2,281,481 -3.7 Vacancy, Commercial Vacancy, Commercial TI/LC

Average (-)

13 Park Central Tower 3.1 4,641,629 -12.7 TI, Management Fee Average (+)

14 Shoppes at Parma 3.1 5,248,620 -9.7 TI, Vacancy, Management Fee

Average

15 Town Center at Sterling 2.9 3,027,307 -8.1 Vacancy, Management Fee, GPR

Average

16 Brazilian Court 2.9 3,359,112 -15.3 Occupancy Cap, Insurance Above Average

17 Evergreen at Southwood 2.8 2,392,239 -14.6 Payroll, R&M, Utilities Average (+)

18 Memorial West/EAV Portfolio 2.7 2,388,897 -5.7 TI/LC, Management Fee Average

19 The Grand McCarren 2.5 1,876,680 -3.6 Vacancy Average (+)

21 Sharon Square 2.1 1,716,666 -21.8 Vacancy, Straight Line Rent, TI/LC

Average (+)

22 Sawgrass Village 1.9 1,652,793 -11.8 Vacancy + Expense Slippage, TI/LC

Average

24 Shops at Central Park 1.7 1,620,534 -6.4 Vacancy, TI/LC Average

28 408 West 130th Street 1.4 1,029,206 -14.3 Expense Plug, Vacancy Average (-)

29 Quail Meadows 1.4 1,174,271 -18.5 OpEx, Management Fee Below Average

30 Hawks Landing Apartments 1.3 1,046,294 -20.1 GPR, Expense Plug, Vacancy

Average

31 Shadow Lake Apartments 1.2 1,040,159 -6.4 PCA, OpEx, Management Fee

Average

39 TownePlace Suites Weston 0.9 1,105,833 -9.6 Occupancy Cap, FF&E Average

49 Vilcom Office 0.5 422,824 -15.7 Vacancy Average

December 2019 11


DBRS MORNINGSTAR SITE INSPECTIONSOf the 55 loans in the pool, the DBRS Morningstar sample included 27 loans, representing a combined 73.6% of the pool by allocated loan balance. Site inspections occurred on 36 of the 113 properties, representing 69.8% of the pool by allocated loan balance. DBRS Morningstar interviewed an on-site property manager, leasing agent, or representative of the borrowing entity for 27 properties, which collectively represent 53.3% of the cutoff loan balance. The resulting DBRS Morningstar property quality scores are highlighted in the exhibit to the right.

DBRS MORNINGSTAR CASH FLOW ANALYSISDBRS Morningstar completed a cash flow review as well as a cash flow stability and structural review on 27 of the 55 loans, representing a combined 73.6% of the pool by allocated loan balance. DBRS Morningstar generally adjusted cash flows to current in-place rent and, in some instances, applied an additional vacancy or concession adjustment to account for deteriorating market conditions or tenants with above-market rents. In certain instances, DBRS Morningstar accepted contractual rent bumps if they were within market levels. Most expenses generally reflect the higher of historical figures and the borrower’s budgeted figures. DBRS Morningstar inflated the real estate taxes and insurance premiums if there was no current tax bill. The deducted capex reflects the greater of the engineer’s inflated estimate and the DBRS Morningstar standard, according to property type. Finally, DBRS Morningstar also deducted leasing costs to arrive at the DBRS Morningstar NCF. If there was a significant upfront leasing reserve at closing, DBRS Morningstar reduced its recognized costs. DBRS Morningstar gave credit to tenants not yet in occupancy if a lease had been signed and the loan was adequately structured with a reserve, LOC, or holdback earnout. The DBRS Morningstar sample had an average NCF variance of -11.6% and ranged from -3.6% (The Grand McCarren) to -21.8% (Sharon Square). For loans not subject to an NCF review, DBRS Morningstar applied the average NCF variance of its respective loan seller.

MODEL ADJUSTMENTSDBRS Morningstar applied POD and/or LGD adjustments to six loans: Harvey Building Products, 805 3rd Avenue, Park Central Tower, Memorial West/EAV Portfolio, Shadow Lake Apartments, and Sawgrass Village, accounting for a combined 16.7% of the pool by allocated loan balance. The model adjustments include the following:

– DBRS Morningstar adjusted the POD and LGD assumptions for Harvey Building Products to reflect an upward capitalization rate (cap rate) adjustment from the Issuer’s implied cap rate of 5.9% to the DBRS Morningstar adjusted cap rate of 7.0%. This change resulted in adjusted DBRS Morningstar Issuance and Maturity LTVs of 82.7% and 74.9%, respectively, which DBRS Morningstar then applied to its POD and LGD calculations. The DBRS Morningstar cap rate adjustment for Harvey Building Products accounts for the specialty use (manufacturing) nature of some of the collateral.

– DBRS Morningstar adjusted the POD and LGD assumptions for 805 3rd Avenue to reflect an upward cap rate adjustment from the Issuer’s implied cap rate of 3.68% to the DBRS Morningstar adjusted cap rate of 4.00%. This change resulted in an adjusted DBRS Morningstar Issuance and Maturity LTV of 35.4%, which DBRS Morningstar then applied to its POD and LGD calculations. The cap rate adjustment for 805 3rd Avenue brings the cap rate more in line with DBRS Morningstar’s view of the market.

– DBRS Morningstar adjusted the POD and LGD assumptions for Park Central Tower to reflect an upward cap rate adjustment from the Issuer’s implied cap rate of 5.13% to the DBRS Morningstar adjusted cap rate of 5.75%. This change resulted in adjusted DBRS Morningstar Issuance and Maturity LTVs of 64.9% and 54.7%, respectively, which DBRS Morningstar then applied to its POD and LGD calculations. The cap rate adjustment for Park Central Tower brings the cap rate more in line with DBRS Morningstar’s view of the market.

DBRS Morningstar Sampled Property Quality

# of Loans

% of Sample

Excellent 0 0.0 Above Average 4 18.5 Average (+) 8 36.7 Average 11 31.3 Average (-) 3 11.7 Below Average 1 1.9 Poor 0 0.0

December 2019 12


– DBRS Morningstar adjusted the POD and LGD assumptions for Memorial West/EAV Portfolio to reflect an upward cap rate adjustment from the Issuer’s implied cap rate of 4.87% to the DBRS Morningstar adjusted cap rate of 5.75%. This change resulted in an adjusted DBRS Morningstar Issuance and Maturity LTV of 69.5%, which DBRS Morningstar then applied to its POD and LGD calculations. The cap rate adjustment for Memorial West/EAV Portfolio brings the cap rate more in line with DBRS Morningstar’s view of the market.

– DBRS Morningstar adjusted the POD and LGD assumptions for Shadow Lake Apartments to reflect an upward cap rate adjustment from the Issuer’s implied cap rate of 4.55% to the DBRS Morningstar adjusted cap rate of 5.00%. This change resulted in an adjusted DBRS Morningstar Issuance and Maturity LTV of 60.3%, which DBRS Morningstar then applied to its POD and LGD calculations. The cap rate adjustment for Shadow Lake Apartments brings the cap rate more in line with DBRS Morningstar’s view of the market.

– DBRS Morningstar adjusted the POD and LGD assumptions for Sawgrass Village to reflect an upward cap rate adjustment from the Issuer’s implied cap rate of 5.73% to the DBRS Morningstar adjusted cap rate of 6.00%. This change resulted in an adjusted DBRS Morningstar Issuance and Maturity LTV of 68.0%, which DBRS Morningstar then applied to its POD and LGD calculations. The cap rate adjustment for Sawgrass Village brings the cap rate more in line with DBRS Morningstar’s view of the market.

– DBRS Morningstar adjusted the POD and LGD assumptions for Marriott Phoenix to reflect an upward cap rate adjustment from the Issuer’s implied cap rate of 6.45% to the DBRS Morningstar adjusted cap rate of 7.50%. This change resulted in adjusted DBRS Morningstar Issuance and Maturity LTVs of 61.10% and 46.29%, respectively, which DBRS Morningstar then applied to its POD and LGD calculations. The DBRS Morningstar cap rate adjustment for Marriott Phoenix accounts for the short-term value growth at the property.

DBRS Morningstar Sampled Property Type

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

AnchoredRetail

Full ServiceHotel

Hotel – Other

Industrial LimitedService Hotel

MHC Mixed Use Multifamily Office Self Storage

UnanchoredRetail

% o

f Poo

l

% o

f Sam

ple

Excellent Above Average Average + Average Average - Below Average Poor Pool

December 2019 13


Loan Size

Loan Size# of

Loans% of Pool

Very Large (>$20.0 million)

23 72.4

Large ($10.0-$20.0 million)

17 20.6

Medium ($5.0-$10.0 million)

9 5.8

Small ($2.0-$5.0 million)

4 1.0

Very Small (

December 2019 14


Loan Structural Features

Pari Passu Notes: Eleven loans, representing a combined 37.4% of the pool by allocated loan balance, have pari passu debt and are identified in the exhibit below.

PARI PASSU NOTES

Property Name Balance ($)% of Pool Deal ID

% of Total Pari Passu Loan Controlling Piece (Y/N)

490-504 Myrtle Avenue 50,000,000 4.4 CGCMT 2019-C7 58.8 Y

35,000,000 Future Secutizations 41.2 N

85,000,000 n/a n/a 100.0 n/a

805 3rd Avenue 50,000,000 4.4 CGCMT 2019-C7 33.3 Y




150,000,000 n/a n/a 100.0 n/a

650 Madison Avenue 50,000,000 4.4 CGCMT 2019-C7 8.5 Y




1,000,000 MAD 2019-650M 0.2 N

586,800,000 n/a n/a 100.0 n/a

405 E 4th Avenue 42,500,000 3.7 CGCMT 2019-C7 68.0 Y


62,500,000 n/a n/a 100.0 n/a

Harvey Building Products 40,000,000 3.5 CGCMT 2019-C7 25.0 N


50,000,000 BMARK 2019-B14 31.3 Y

50,000,000 BMARK 2019-B15 31.3 N

160,000,000 n/a n/a 100.0 n/a

Giant Anchored Portfolio 38,500,000 3.4 CGCMT 2019-C7 39.7 Y


30,000,000 BANK 2019-BNK24 30.9 N


97,000,000 n/a n/a 100.0 n/a

Austin Landing Mixed-Use 38,750,000 3.4 CGCMT 2019-C7 43.7 N

50,000,000 BMARK 2019-B15 56.3 Y

88,750,000 n/a n/a 100.0 n/a

Park Central Tower 35,000,000 3.1 CGCMT 2019-C7 58.3 Y

25,000,000 CF 2019-CF3 41.7 N

60,000,000 n/a n/a 100.0 n/a

December 2019 15


PARI PASSU NOTES

Property Name Balance ($)% of Pool Deal ID

% of Total Pari Passu Loan Controlling Piece (Y/N)

Alrig Portfolio 35,000,000 3.1 CGCMT 2019-C7 70.7 Y

14,500,000 CF 2019-CF3 29.3 N

49,500,000 n/a n/a 100.0 n/a

Shoppes at Parma 35,000,000 3.1 CGCMT 2019-C7 61.3 Y

14,000,000 UBS 2019-C18 24.5 N


57,075,000 n/a n/a 100.0 n/a

Wells Fargo Place 10,000,000 0.9 CGCMT 2019-C7 12.5 N

40,000,000 MSC 2019-L3 50.0 Y

30,000,000 CF 2019-CF3 37.5 N

80,000,000 n/a n/a 100.0 n/a

December 2019 16


Additional Debt: Three loans, representing 8.4% of the pool, have existing mezzanine debt. Three additional loans, representing 12.2% of the pool by allocated loan balance, have additional debt in the form of subordinate companion loans. There are seven loans, representing 7.1% of the pool, which permit future mezzanine debt, subject to certain LTV, debt yield, and/or DSCR thresholds and lender-approved intercreditor agreement and rating agency confirmation.

Interest Only

# of Loans

% of Pool

Full IO 26 55.3 Partial IO 15 26.7 Amortizing 12 17.8 Interest Only - ARD 2 0.2

DBRS Morningstar Expected Amoritization

# of Loans

% of Pool

0.0% 28 55.5 0.0%-5.0% 1 0.2 5.0%-10.0% 5 13.0 10.0%-15.0% 7 11.3 15.0%-20.0% 11 12.8 20.0%-25.0% 3 7.2 >25.0% 0 0.0

Note: For certain ARD loans, expected amortization may include amortization expected to occur after the ARD but prior to single/major tenant expiry.

SUBORDINATE DEBT

Loan NameTrust Balance

($)Pari Passu Balance ($)

B Note Balance ($)

Mezz/Unsecured

Debt Balance ($)

Future Mezz/Unsecured Debt

(Y/N)Total Debt Balance ($)

490-504 Myrtle Avenue 50,000,000 35,000,000 0 20,000,000 N 105,000,000

650 Madison Avenue 50,000,000 536,800,000 213,200,000 0 N 800,000,000

805 3rd Avenue 50,000,000 100,000,000 125,000,000 0 N 275,000,000

Harvey Building Products 40,000,000 120,000,000 0 0 Y 160,000,000

Austin Landing Mixed Use 38,750,000 50,000,000 26,000,000 0 N 114,750,000

The Grand McCarren 28,000,000 0 0 4,500,000 N 32,500,000

Sherwood and Glen Ridge MHC 21,000,000 0 0 0 Y 21,000,000

Homewood Suites Eatentown 17,150,000 0 0 2,500,000 N 19,650,000

Wells Fargo Place 10,000,000 70,000,000 0 0 Y 80,000,000

Morton Place Apartments 5,925,000 0 0 0 Y 5,925,000

Birdneck Self Storage 2,180,000 0 0 0 Y 2,180,000

Dollar General Sullivan 1,169,000 0 0 0 Y 1,169,000

Dollar General Adrian 854,000 0 0 0 Y 854,000

Leasehold: Gartner Campus South, representing 3.5% of the pool by allocated loan balance, is fully secured by the borrower’s leasehold interest in the property. The ground lease has an initial expiration of May 31, 2037, and the tenant has six five-year extension options remaining. In this instance, the ground lease has an expiration day (including renewal options) far enough beyond loan amortization to be traditionally financeable.

December 2019 17


Sponsor Strength: DBRS Morningstar identified nine loans sponsors, accounting for 15.6% of the pool by allocated loan balance, associated with a prior voluntary bankruptcy, inadequate CRE experience, and/or negative credit events. DBRS Morningstar applied POD penalties to mitigate this risk. DBRS Morningstar additionally identified three loans, representing a combined 10.4% of the pool by allocated loan balance, associated with Strong sponsorship because of the sponsor’s extensive experience in the CRE sector and significant wherewithal.

Property Release: Nine loans representing approximately 25% of the pool allow for the release or defeasance of one or more properties or a portion of the mortgaged property, subject to release prices in an amount generally at least equal to 110.0% of the allocated loan amounts of the respective properties and/or certain leverage tests prescribed in the individual loan agreements.

Property Substitution: There are no loans in the pool that allow for the substitution of properties.

Terrorism Insurance: Terrorism insurance is required and in place for all loans.

RESERVE REQUIREMENT BORROWER STRUCTURE

Type # of Loans % of Pool Type # of Loans % of Pool

Tax Ongoing 50 85.0 SPE with Independent Director and Nonconsolidation Opinion

23 71.5

Insurance Ongoing 35 55.3 SPE with Independent Director Only 10 11.6

Capex Ongoing 47 84.9 SPE with Nonconsolidation Opinion Only

0 0.0

Leasing Costs Ongoing1 17 68.4 SPE Only 22 16.9

1. Percent of office, retail, industrial, and mixed-use assets based on DBRS Morningstar property types.

DBRS Morningstar Sponsor Strength

# of Loans

% of Pool

Strong 3 10.4 Average 48 78.7Weak 2 4.6 Bad/Litigious 2 6.4

December 2019 18


COLLATERAL SUMMARY

DBRS Morningstar Property Type Multifamily Year Built/Renovated 2015/2017

City, State Brooklyn, NY Physical Occupancy (%) 96.2

Units/SF 236 Physical Occupancy Date October 2019

This loan is secured by the borrower’s fee interest in a portfolio of two newly developed, Class A multifamily properties, totaling 236 units, in Brooklyn, New York. The sponsors of the loan, Josh Zegen and Brian Shatz of Madison Realty Capital, developed and finished the properties in 2015 and 2017. The two multifamily properties are called The Refinery, with 93 units, and The Posthouse, with 143 units. As of October 25, 2019, the portfolio has an average occupancy of 96.2%, with The Refinery’s occupancy at 95.7% and The Posthouse’s rate at 96.5%. The $85 million loan ($360,169.49 per unit) consists of a senior mortgage divided 59% and 41% between Citibank and J.P. Morgan, respectively. Additionally, there is a $20 million mezzanine loan ($444,915 per unit/$707 PSF on a last-dollar basis) with SL Green Realty Corp. The loan proceeds helped to pay off approximately $102 million in debt, secure closing costs, and provide equity to the sponsors. The loan has a 10-year term with full-term interest-only payments.

The Refinery, on 490 Myrtle Avenue, is a seven-story apartment complex totaling 93 units. The property’s unit mix comprises 74 fair market units and 19 affordable units. On average, fair market units are 693 sf for a monthly rent of $3,531. Affordable units average 703 sf for $961 per month. Of the total 93 units, there are 24 studio apartments, 35 one-bedroom units, and 34 two-bedroom units. The Refinery began lease-up in Q3 2015 and achieved stabilization within 22 months.

The Posthouse, on 504 Myrtle Avenue, is a seven-story luxury apartment complex. The property offers 114 fair market units and 29 affordable units. On average, fair market units are 599 sf and $3,249 per month, and affordable units are 533 sf and $788 per month. Of the total 143 units, there are 47 studio apartments, 62 one-bedroom units, and 34 two-bedroom units. Initial lease-up for the property began in Q3 2017 and

Brooklyn, New York

490-504 Myrtle Avenue

Loan SnapshotSellerCREFI

Ownership InterestFee Simple

Trust Balance ($ Millions)50.0

Loan psf/Unit ($)360,169

% of the Pool4.4

Loan Maturity/ARDDecember 2029

Amortization

n/a

DBRS Morningstar Issuance DSCR (x)1.77

DBRS Morningstar Issuance LTV (%)60.2

DBRS Morningstar Balloon LTV (%)60.2

DBRS Morningstar Property TypeMultifamily

DBRS Morningstar Property QualityAbove Average

Debt Stack ($ Millions)Trust Balance50.0

Pari Passu

35.0B Note0.0

Mezz20.0

Total Debt105.0

Loan PurposeRefinance

Equity Contribution/ (Distribution) ($ Millions)(0.9)

December 2019 19


490-504 MYRTLE AVENUE – BROOKLYN, NEW YORK

it achieved stabilized occupancy within 10 months. Upon lease-up, the sponsors offered tenants one month of free rent for a 12-month lease and two months of free rent for a 24-month lease. Tenants who renewed their leases didn’t receive the free rent benefit.

PORTFOLIO SUMMARY

PropertyCutoff Date Loan

Amount% of Loan Amount City, State Property Type Units % of NRA

Year Built/Renovated Occupancy

490 Myrtle Avenue $30,856,334.00 38.3% Brooklyn, New York Multifamily 93 39.4% 2015/n/a 95.7%

504 Myrtle Avenue $19,143,666.00 61.7% Brooklyn, New York Multifamily 143 60.6% 2017/n/a 96.5%

Total/Wtd. Avg. $50,000,000.00 100.0% Brooklyn, New York Multifamily 236 100.0% Various 96.2%

In sum, the portfolio comprises 188 fair market units and 48 affordable units. The portfolio’s fair market units average 636 sf and have monthly rents of $3,359 ($63 psf per year). The portfolio’s affordable units average 601 sf and have average monthly rents of $858 ($17 psf per year). For both properties, common unit features include stainless-steel appliances, Caesarstone quartz countertops, and in-unit washers/dryers. Communal amenities include a fitness center, common lounge, and roof deck.

SPONSORSHIPThe sponsors of the transaction are Josh Zegen and Brian Shatz of Madison Realty Capital, a real estate private equity firm based in New York. They are both responsible for constructing and managing the two properties. The sponsors’ private equity firm, Madison Realty Capital, was founded in 2004 and focuses on real estate debt and equity strategies, emphasizing construction and acquisition lending, value-add investments, and ground-up developments. Madison Realty Capital has a portfolio valued over $10 billion and includes a wide variety of assets, such as multifamily, retail, office, industrial, and hotel properties.

DBRS MORNINGSTAR ANALYSISSITE INSPECTION SUMMARYDBRS Morningstar toured the interior and exterior of the properties on November 7, 2019, at 10:00 a.m. Based on the site inspection, DBRS Morningstar found the property quality to be Average (+).

The mixed-use buildings are on Myrtle Avenue, between Hall Street to the west and Emerson Place to the east. The buildings are directly adjacent to each other on Myrtle Avenue. Accessibility to the properties is average for Brooklyn. The G train,

December 2019 20



which is one of the less-traveled subway lines in New York, is a 10-minute walk away. The C train, the next closest subway stop, is a 25-minute walk, although a bus ride reduces this to a 15-minute journey.

The two buildings that compose 490-504 Myrtle Avenue are The Refinery and The Posthouse. The Refinery has 93 units, while The Posthouse has 143 units. Because the properties are condominium structures, the retail contained on the first floor is not part of the collateral. The retail below The Refinery is a grocery store. Of the four retail spaces below The Posthouse, one houses a doctor’s office, and the rest are vacant. When asked if there was interest in renting the retail spaces, the manager said there hasn’t been much interest. He attributed this to the fact that existing tenants in the immediate vicinity already serve the area’s retail needs and that the neighborhood is not highly trafficked. He also mentioned nearby malls, such as City Point BKLYN and Atlantic Terminal Mall, which hurt the prospects of a retail tenant taking occupancy in the vacant spaces.

The properties have a student concentration, primarily because of its location near the Pratt Institute campus. The properties showed signs of the large art student population, such as the striking lobby decor. Additionally, the rooftop hours at The Posthouse had a printed label over them, which changed the closing time to 10:00 p.m. from 12:00 a.m. This change is due to parties happening on the rooftop, according to management.

The manager noted that the multifamily rental market is tight. There was a new apartment building being constructed across the street from The Refinery and The Posthouse. Also across the street, a retail tenant was moving into and painting his new space. These activities suggest that the area is continuing to undergo growth and development. The manager does not expect the adjacent apartment building to have a large impact on rents or vacancy at the properties. This is due to the sheer number of Pratt students and the small size of the new construction. Other new apartment buildings in the area that have already leased-up, or are in the lease-up process, have not affected the properties’ vacancy or asking rent, because of significant demand for residency in the area.

The units DBRS Morningstar inspected had modern finishes in the kitchen, including stainless-steel appliances, Caesarstone quartz countertops, and recessed lighting. The bathrooms had similarly high-end finishes, such as Grohe fixtures. All units were of typical size for new Brooklyn apartments. One slight disappointment was the HVAC units in the apartments, which looked older than they should be in a brand-new building. Units had ample natural lighting, including many units with their own patio. Each building had its own fitness center, which were of normal size for Brooklyn, with visibly new equipment.

December 2019 21



DBRS MORNINGSTAR NCF SUMMARYNCF ANALYSIS

T-12 September 2019 ($) Issuer NCF ($)DBRS Morningstar NCF

($) NCF Variance (%)

GPR 7,721,572 8,026,071 8,020,983 -0.1

Other Income 51,663 98,041 51,663 -47.3

Vacancy & Concessions -586,010 -287,292 -401,049 -39.6

EGI 7,187,225 7,836,820 7,671,597 -2.1

Expenses 1,760,424 1,516,729 1,823,015 20.2

NOI 5,426,801 6,320,091 5,848,582 -7.5

Capex 0 59,000 59,000 0.0

NCF 5,426,801 6,261,091 5,789,582 -7.5

The DBRS Morningstar NCF is based on the DBRS Morningstar North American Commercial Real Estate Property Analysis Criteria. The resulting DBRS Morningstar NCF was $5,789,582, down 7.5% from the Issuer’s NCF figure of $6,261,091. The primary drivers of the variance are vacancy, payroll, and other income. DBRS Morningstar concluded the vacancy for the residential portion at 5%, which factors in the tight market the assets operate within. DBRS Morningstar estimated the management fee at 3% of the EGI, which considers the portfolio’s high rents. The taxes assumption equaled the average tax load over the loan term, which takes into account the properties’ 421a tax abatements. Except for utilities and payroll, which DBRS Morningstar estimated at the T-12 ended September 30, 2019, amount plus 3%, all other expenses reflect the borrower’s budget. DBRS MORNINGSTAR VIEWPOINTDBRS Morningstar believes both properties within the 490-504 Myrtle Avenue portfolio will continue to perform given the locations, significant demand (particularly from students), and submarket fundamentals. The properties feature convenient access to retailers, community services, education centers, medical facilities, public transportation options, and major employment centers within the five boroughs of New York. The properties are also close to bus stations, although slightly farther from subway stations. While new supply poses a slight risk to the properties, DBRS Morningstar believes the assets’ location near Pratt will ensure a base level of demand that other new developments with inferior relative locations will have more difficulty replicating.

DOWNSIDE RISKS – The loan is interest only for the entire term, which increases the risk of maturity loan default.

– New multifamily development has been highly prevalent in New York, particularly in Brooklyn.

December 2019 22



STABILIZING FACTORS – The properties are a few years old and both quickly achieved stabilization. The Posthouse, the larger of the two properties, had 55.27% occupancy in 2017, 90.77% in 2018, and 96.50% as of October 25, 2019. Although the borrower offered some concessions during initial lease-up, it no longer does. The borrower will have approximately $7 million in equity in the transaction after the refinancing is complete. In addition, the appraisal valued the portfolio at $141,300,000 ($598,728.81 per unit), representing an Issuer LTV of 60.2%.

– Strong demand and stable market conditions are the motivating factors behind new development. Net absorption in Brooklyn has kept pace with new supply. The appraiser predicts rents and occupancy to continue to rise as gentrification permeates across the Clinton Hill neighborhood. The submarket has experienced a positive net absorption of 975 units year to date. Since 2010, the submarket has had an average vacancy rate of 5.3%, with over 2% in annual rent growth, and positive net absorption of approximately 3,420 units.

December 2019 23


COLLATERAL SUMMARY

DBRS Morningstar Property Type Mixed Use Year Built/Renovated 1957/2015

City, State New York, NY Physical Occupancy (%) 97.4

Units/SF 600,145 Physical Occupancy Date October 2019

This loan is secured by the borrower’s fee-simple interest in a 27-story (604,096 sf ) mixed-use office and retail property in New York City, on Madison Avenue between 59th and 60th streets in the Plaza District. The loan will total $800 million and is structured as a fixed-rate loan with a 10-year, interest-only term. Loan proceeds will be used to refinance existing debt of $800 million and fund upfront reserves and cover closing costs. The JV Sponsor acquired the asset from The Carlyle Group in 2013 for approximately $1.3 billion.

The $586.8 million senior note ($50 million of which is being securitized in this transaction) sizes to BBB (low) based on DBRS Morningstar’s analysis of the loan on a stand-alone basis.

PROPERTY OVERVIEWThe property was constructed in 1957 as an eight-story building, and a heavy expansion in 1987 added 19 stories of office space. The property is 96.8% leased and located in the largest office submarket in the country. The property features a wide range of diverse and highly rated tenants that comprise 63.6% of the NRA. The office space is the global headquarters for Ralph Lauren, occupying 45.9% of the property’s NRA. The ground-floor retail spaces are occupied by Celine, Moncler, and Tod’s. The property is easily accessible by public transportation (MTA subway lines F, M, N, Q, R, W, 4, 5, 6, and Metro North), near both major and local thoroughfares (FDR drive, Queensboro Bridge, and Park Ave) and close to some of the most popular areas in Midtown Manhattan such as Central Park, Rockefeller Center, Museum of Modern Art, and the luxury retail corridors on 5th Ave and Madison Ave.

New York, New York

650 Madison Avenue




Loan psf/Unit ($)5,594,406

% of the Pool4.4


Amortizationn/a




DBRS Morningstar Property TypeMixed Use

DBRS Morningstar Property QualityAverage (+)


Pari Passu

536.8B Note213.2

Mezz0.0

Total Debt800.0


Equity Contribution/ (Distribution) ($ Millions)9.5

December 2019 24


650 MADISON AVENUE – NEW YORK, NEW YORK

TENANT SUMMARY

Tenant SF % of Total NRA

DBRS Morningstar Base

Rent PSF

% of Total DBRS Morningstar Base

Rent Lease Expiry

Investment Grade? (Y/N)

Ralph Lauren Corp 277,016 46.1% $89.40 32.8% 12/31/2024 Y

Memorial Sloan Center 100,700 16.8% $92.97 12.4% 7/31/2023 Y

Willet Advisors LLC 25,732 4.3% $155.00 5.3% 12/31/2024 N

Sotheby's 37,772 6.3% $91.60 4.6% 11/30/2035 N

BC Partners Inc. 19,380 3.2% $118.58 3.0% 1/31/2027 N

Subtotal/Wtd. Avg. 460,600 76.7% $95.25 58.2% n/a n/a

Other Tenants 124,062 20.7% $254.41 41.8% Various Various

Vacant Space 15,753 2.6% n/a n/a n/a n/a

Total/Wtd. Avg. 600,415 100.0% $125.64 100.0% n/a n/a

SPONSORSHIPThe borrower for this transaction is Vornado and Oxford Properties, which owns and operates Class A office/retail assets. Vornado is one of the largest owners of commercial real estate in the United States, with a portfolio of $17.2 billion in assets under management. Oxford Properties is a global real estate investor with about $50 billion worth of assets under management. This joint venture will also include investors such as JP Morgan Asset Management, Crown Acquisitions, and Highgate Hotels.

DBRS MORNINGSTAR ANALYSISSITE INSPECTION SUMMARYBased on the site inspection and management tour conducted on the morning of Thursday, November 21, 2019, DBRS Morningstar found the property quality to be Average (+).

The property is at the corner of Madison Avenue and 59th Street in midtown Manhattan, with significant high-street retail frontage along Madison Avenue. The property is about half a block from the southern end of Central Park, which provides the middle and upper floors of the building with relatively unobstructed views of the park. The area is dominated by high-end ground floor retailers including Stuart Weitzman, Canali, Eton, Tom Ford, and Lalique. Nearby subway service includes the N-R-W at 5th Avenue Station and 4-5-6 service about two blocks west at the 59th Street-Lexington Avenue station.

December 2019 25



The lobby is modern and typical of Class A Midtown office buildings but not particularly striking. The sponsors repositioned some of the mezzanine space formerly occupied by Crate & Barrel and leased the space to Sotheby’s. The Sotheby’s space was recently completed and was nicely built out, with marble and glass throughout. The floor also includes some outdoor space in the form of a wraparound balcony.

The Memorial Sloan Kettering (MSK) space was well-kept but understandably more typical of a medical office, with waiting, exam, and diagnostic rooms across various portions of the space. The building also serves as the headquarters for Ralph Lauren, whose space is laden with custom wood paneling and includes a large open wood staircase that spans multiple floors. The Ralph Lauren space was busy at the time of the tour but in need of light updating (carpet in certain areas, for example). DBRS Morningstar also toured various prebuild spaces throughout the building, some of which had sought-after views of Central Park. The prebuild space was modern and thoughtfully designed, with high-end kitchen spaces and glass offices along the exterior. The prebuild space could easily be taken as-is by a tenant.

The retail component at the property includes high-end retailers Celine, Moncler, and Tod’s. DBRS Morningstar toured both the Celine and the Moncler spaces on the ground floor. Both were typical of luxury fashion retailers, though Celine’s space clearly benefited from the approximately $15 million TI package. The Moncler store uses customer-recognition technology to help monitor foot traffic and sales conversion ratios.

Overall, the building was typical of Class A Manhattan office space, with the added benefit of ultraluxury retail anchors on the ground floor along Madison Avenue.


2016 ($) 2017 ($) 2018 ($)

T-12 September

2019 Issuer NCF ($)

DBRS Morningstar

NCF ($)NCF Variance

(%)

Recoveries 7,020,651 7,750,395 8,784,226 9,361,042 10,762,016 10,762,016 0.0

Other Income 222,388 265,643 319,055 437,101 371,407 362,097 -2.5

Vacancy -86,339 -829,105 0 0 -3,327,410 -4,392,778 32.0

EGI 67,178,531 72,488,704 75,039,495 78,288,218 87,327,989 86,237,930 -1.2

Expenses 24,477,297 25,947,358 26,481,999 27,326,681 28,901,495 29,035,497 0.5

NOI 42,701,234 46,541,346 48,557,496 50,961,537 58,426,495 57,202,433 -2.1

Capex 0 0 0 0 150,104 148,512 -1.1

TI/LC 0 0 0 0 1,500,000 6,207,753 313.9

NCF 42,701,234 46,541,346 48,557,496 50,961,537 56,776,391 50,846,168 -10.4

The DBRS Morningstar NCF is based on the DBRS Morningstar North American Commercial Real Estate Property Analysis Criteria. The resulting DBRS Morningstar NCF for the subject was $50,846,168, representing a -10.45% variance from the issuer’s underwritten figure of $56,776,391. The primary drivers of the variance were vacancy, management fee, and TI/LCs. DBRS Morningstar concluded a vacancy of 5.5%, a management fee of 4% of EGI capped at $1 million, and substantially higher TI/LC assumptions. DBRS Morningstar concluded a total TI/LC cost of over $6.2 million, or just under $11/PSF normalized, whereas the issuer underwrote $1.5 million.

December 2019 26



DBRS MORNINGSTAR VIEWPOINTThe 650 Madison Avenue building offers high-quality Class A office space with views of Central Park and high-street ground floor retail in an excellent location. Ralph Lauren has been headquartered at the building since 1989 and has expanded several times, and MSK is a high-investment-grade tenant with a substantial presence at the property as well.

The sponsor has been successful in repositioning the retail component formerly occupied by Crate & Barrel, adding significant value in the process. The Crate & Barrel store consumed a large amount of space and did not mesh as well with the other high-end retail in the immediate area. The mezzanine space was successfully leased to Sotheby’s, and the sponsors were able to entice luxury fashion retailers Celine and Moncler to sign leases for the ground-floor space. The $15 million TI package for Celine was substantial and among the highest in the retail comps that DBRS Morningstar was provided, but we believe it was necessary in order to elevate the retail component from middle-market to ultraluxury.

The biggest risk at the property is likely the midloan term expiration of the Ralph Lauren lease, which, if allowed to expire, would leave approximately 250,000 sf of vacant space. While Ralph Lauren has been headquartered at the property for more than 20 years, it is one of the few fashion brands based in the Plaza District submarket.

Overall, DBRS Morningstar views the property favorably for its strong long-term occupancy history (averaging 94.5% since 1996) with the two investment-grade anchor office tenants and a successful repositioning of the Crate & Barrel space to ultraluxury retail with long-term tenants. Additionally, the Central Park views from above the 15th floor and outdoor space are highly sought-after amenities for any office tenant.

DOWNSIDE RISKS – The property’s two anchor tenants, representing over 60% of the NRA, have leases that expire during the loan term. Furthermore, approximately 95% of the property’s cumulative gross rent is scheduled to expire through the loan’s maturity.

– The loan’s recourse carve-out guaranty is capped at 10% of the loan amount.

– The Plaza District submarket continues to face stiff competition for tenants from newer buildings in the Hudson Yards and Downtown Manhattan submarkets.

STABILIZING FACTORS – Both anchor office tenants have a significant operational presence at the property, and both spaces benefit from somewhat specialized build-outs. For example, in the case of MSK, there is a substantial amount of medical imaging infrastructure in the space.

– The loan is a cash-neutral refinancing, with proceeds being used only to repay existing debt and cover closing costs.

– The sponsor has successfully repositioned the retail component, which is now responsible for approximately a fourth of the building’s gross rent.

December 2019 27


COLLATERAL SUMMARY

DBRS Morningstar Property Type Office Year Built/Renovated 1982


Units/SF 596,100 Physical Occupancy Date October 2019

This loan is secured by the borrower’s fee-simple interest in 805 Third Avenue, a 596,100 sf, Class A office building located in the Midtown neighborhood of New York City. The collateral consists of a 565,000 sf office tower and a 31,000 sf, three-story retail pavilion. The loan has a 10-year term and is IO during the entire period. Loan proceeds of $275 million will be used to refinance $162 million of existing debt, fund a 1% loan prepayment fee, repatriate $101 million in equity to the sponsor and cover $6.8 million in closing costs and fund $5.2 million in reserves. Ongoing reserves will be allocated to a real estate tax reserve, an insurance reserve, capex reserve and TI/LC reserve.

The sponsor, Cohen Brothers Realty Corp., developed the building in 1982 and has owned the property since then. The sponsor initially had a ground lease for the subject until June 1998, when the sponsor acquired fee-simple interest in the collateral.

New York, New York

805 3rd Avenue




Loan psf/Unit2,956,989

% of the Pool4.4


Amortizationn/a




DBRS Morningstar Property TypeOffice

DBRS Morningstar Property QualityAverage (+)


Pari Passu

100.0B Note125.0

Mezz0.0

Total Debt275.0



December 2019 28


805 3RD AVENUE – NEW YORK, NY

TENANT SUMMARY

Tenant SF % of Total NRADBRS Base Rent PSF ($)

% of Total DBRS Base

Rent Lease Expiry


Meredith Corporation 212,594 35.7 41.05 29.7 12/2026 N

KBRA1 95,200.00 16.0 n/a n/a 8/2010

Gen II Fund1 70,094.00 11.8 n/a n/a 12/2026

NewMax1 23,800.00 4.0 n/a n/a 12/2026

Poten & Partners Inc. 29696.00 5.0 79.30 8.0 8/2010 Y

Toyota Tsusho America, Inc. 41,322 8.0 56.87 8.0 11/2022 Y

Extell 27,289 4.6 57.79 5.4 3/2028

YES Network, LLC 23,800.00 4.0 53.00 4.3 5/2022

Subtotal/WA 334,701 56.1 48.61 55.4 Various

Other Tenants 213,384 35.8 61.45 44.6 Various

Vacant Space 48,015 8.1 n/a n/a n/a

Total/WA 596,100 100.0 49.29 100.0 Various

1. Subtenants of Meredith Corporation. Upon termination of Meredith Corporation's lease, each subtenant is able, at the landlord's option, to directly lease from the landlord.

The 29-story property is currently 91.9% occupied by 62 tenants. The rent roll consists of 57 office tenants and five retail tenants. The largest tenant is Meredith Corporation, an Ohio-based media conglomerate that owns a series of television and radio stations in addition to a variety of publications. In 2018, Meredith Corporation merged with Time Inc. Following the merger, Meredith Corporation vacated their space while still maintaining its lease at the subject property. Since Meredith Corporation’s move, the media company has subleased 190,000 sf of its space to three subtenants: (1) Kroll Bond Rating Agency, Inc., a credit rating agency, (2) Gen II Fund Services, LLC, the largest U.S. independent private equity fund administrator, and (3) NewsMax, a political news outlet. Considering Meredith Corporation’s subtenants, the subject property has a diverse and granular rent roll from a wide array of industries. No tenant occupies more than 16% of the NRA. Furthermore, with the subtenants, there is no rollover greater than 24.4% of NRA within a given year. Effective January 2024, Meredith Corporation has a one-time termination option subject to a fee of $8 million within nine months of termination. Subtenants will then be able to negotiate directly with the sponsor for a direct lease.

SPONSORSHIPThe transaction benefits from experienced and qualified sponsorship. The sponsor is Cohen Brothers Realty Corp., a New York City-based private real estate development firm that has over 50 years of experience in the industry. The firm’s portfolio consists of 12 million sf of commercial real estate located throughout the United States with a large presence in Manhattan. The firm has a focus in developing Class A, luxury high-rise office buildings. The loan’s Guarantor is Charles S. Cohen, the president and CEO of Cohen Brothers Realty Corp. As of October 2019, Cohen’s net worth was $3.5 billion.

December 2019 29



SITE INSPECTION SUMMARYDBRS Morningstar toured the interior and exterior of the property on November 19, 2019, at 11 a.m. with a representative of the sponsor. Based on the site inspection, DBRS Morningstar found the property quality to be Above Average.

The 805 Third Avenue asset is a glass tower located on the southeast corner of 3rd Avenue and 49th Street in the heart of Midtown East. The property is two blocks from the 6 train that serves the east side of Manhattan and is one train stop from Grand Central station, which offers access to the 4, 5, 6, 7 trains, Metro North Railroad, and the 42nd Street shuttle to Times Square. The subject’s surrounding area comprises mostly mixed-use office and retail buildings, while residential properties are more typical on mid-block side streets. There is a heavy concentration of nearby restaurants, both high end and fast food, to serve the large corporate presence in the vicinity. Located in the Plaza District submarket, major financial companies such as The Blackstone Group and JPMorgan Chase are nearby as well as high-end street retail located on Madison Avenue and Fifth Avenue.

The property was built by the sponsor in 1982 and features efficient floorplates in excess of 20,000 sf that work well for both full-floor and multiple tenants. The first three floors feature an atrium layout with several food tenants and eating areas with tables that serve employees in the surrounding area. DBRS Morningstar viewed a vacant space on the 16th floor that is currently asking $66.00 psf. The sponsor anticipates striking a deal around $63.00 psf, which is approximately 17% higher than WA in-place office base rents of $52.33 psf. The upper floors have excellent views of the East River that further enhance the desirability of the building. Recent capital improvements include the elevator cabs which were fully re-done approximately three years ago, according to the sponsor.

December 2019 30




2016 ($) 2017 ($) 2018 ($)T-12 September

2019 ($) Issuer NCF ($)

DBRS Morningstar

NCF ($)NCF Variance

(%)

GPR 26,699,624 26,537,453 28,121,265 27,948,556 32,466,131 32,275,376 -0.6

Recoveries 2,739,547 2,224,059 2,540,371 2,662,936 2,568,104 2,568,104 0.0

Other Income 1,214,172 1,189,407 1,215,336 1,247,675 1,303,791 1,247,675 -4.3

Vacancy 0 0 0 0 -3,062,830 -3,497,232 14.2

EGI 30,653,344 29,950,919 31,876,971 31,859,168 33,275,196 32,593,924 -2.0

Expenses 14,898,290 15,081,158 15,290,213 15,087,482 15,020,787 15,033,074 0.1

NOI 15,755,054 14,869,761 16,586,758 16,771,686 18,254,409 17,560,850 -3.8

Capex 0 0 0 0 119,220 149,025 25.0

TI/LC 0 0 0 0 1,200,000 2,716,316 126.4

NCF 15,755,054 14,869,761 16,586,758 16,771,686 16,935,189 14,695,510 -13.2

The DBRS Morningstar NCF is based on the DBRS Morningstar North American Commercial Real Estate Property Analysis Criteria. The resulting DBRS Morningstar NCF was $14,695,510, a -13.2% variance from the issuer’s NCF figure of $16,935,189. The primary drivers of the variance were vacancy and TI/LC. DBRS Morningstar assumed a 10% vacancy compared with the issuer’s 8.7%. DBRS Morningstar calculated TIs at $70 psf and $25 psf for new tenants and renewals, respectively, on spaces above 15,000 sf and $40 psf and $20 psf on new tenants and renewals, respectively, on spaces below 15,000 sf. Historically, smaller tenants in the building have received much smaller TI packages than larger tenants. Overall, TI/LC was assumed to $4.56 psf compared with the issuer’s underwriting of $2.01 psf.

DBRS MORNINGSTAR VIEWPOINTDBRS Morningstar expects the loan to perform over the term given the building’s quality, granular lease rollover, excellent location and high-quality sponsor. However, DBRS Morningstar is concerned with weak loan metrics of 5.4% debt yield and a going-in DBRS Morningstar DSCR of 1.3x (based on IO payments). This should be mitigated by the potential for upside by rolling tenants that are paying below-market rents. Specifically, larger office tenants over 15,000 sf are below market with an occupied base rent of $48.52 psf compared with recent lease executions in the low $60 psf range. DBRS Morningstar believes the sponsor will be able to successfully roll tenants to higher rents in line with the market. Another concern is that a major law firm will be vacating approximately 400,000 sf two blocks from the subject in 2020. The sponsor, however, is not concerned because the other building’s asking rent is approximately $20 psf higher than 805 Third Avenue.

DOWNSIDE RISKS – Loan metrics are weak with a going-in DBRS Morningstar Debt Yield of 5.4% and a DBRS Morningstar DSCR of 1.3x interest only.

– The loan is full-term IO, providing no reduction to the loan basis over the loan term.

– A major law firm is vacating over 400,000 sf two blocks from the subject, which could compete with the property and give leverage to prospective, new and existing tenants.

STABILIZING FACTORS – Meredith Corporation, the largest tenant at the property, has a lease in place that is considerably under market with an in place base rent of $41.05 compared to recent leases getting signed above $60 per square foot. Furthermore, the sponsor

December 2019 31



and Meredith Corporation share in the sublease profits 50/50. Approximately $7 million is anticipated to be split between Meredith and the sponsor through the end of Meredith’s lease term. Rolling the subtenants at market should result in a net cash flow at loan maturity that is substantially higher than current cash flow.

– The property has a granular lease rollover in which no more than 31.3% of the gross rents expire annually during the loan term (in 2026). Further enhancing the lease roll exposure, Meredith Corporation subleased approximately 190,000 sf to three separate tenants.

– The subject’s office rents are at a lower price point than a nearby property with over 400,000 sf anticipated to vacate next year, thus is not expected to compete directly.

December 2019 32


COLLATERAL SUMMARY

DBRS Morningstar Property Type Multifamily Year Built/Renovated 1900-20/1989-2012


Units/SF 109 Physical Occupancy Date September 2019

The loan is secured by the borrower’s fee-simple interest in a portfolio of three multifamily properties totaling 109 units in New York City’s East Village neighborhood. From March 2013 to May 2013, the sponsor acquired the three properties for a combined cost of $52.5 million. Loan proceeds of $45.1 million were used to cover $43.3 million in existing debt from the 2013 acquisition, repatriate $525,665 in equity to the sponsor, cover $1.2 million in closing costs, and fund $66,690 in upfront reserves.The loan structure cross-collateralizes the three properties and allows for properties to be released contingent on required release percentages and remaining collateral credit metrics.

New York, New York

East Village Multifamily Portfolio Pool 2




Loan psf/Unit ($)75

% of the Pool4.0


Amortizationn/a

DBRS Morningstar Issuance DSCR (x)1.62x



DBRS Morningstar Property TypeMultifamily

DBRS Morningstar Property QualityAverage (-)


Pari Passu

0.0B Note0.0

Mezz0.0

Total Debt45.1



December 2019 33


EAST VILLAGE MULTIFAMILY PORTFOLIO POOL 2 – NEW YORK, NEW YORK

PORTFOLIO SUMMARY

PropertyCutoff Date Loan

Amount ($)% of Loan Amount Units Occupancy (%)

199-203 E 4th Street 20,719,477 45.9 28 96.4

118-120 E 4th Street 17,683,892 39.2 69 97.1

315 E 10th Street 6,704,292 14.9 12 100.0

Total/WA 45,107,661 100.0 109 97.2

The portfolio is composed of three midrise, walk-up buildings in the East Village submarket of Manhattan. There are 109 apartment units, 20 of which are rent stabilized, and one commercial unit (500 sf ). The only commercial tenant is a barbershop, a common tenant in a residential neighborhood. The East Village neighborhood has a thriving nightlife and is renowned for its music and art scene. Buildings within the East Village are primarily other walk-up apartments in addition to restaurants and retail. Tenants benefit from proximity to public transportation as the neighborhood provides access to many bus and subway lines. According to Reis, average asking rents are expected to increase by 1.4% in 2020 and average vacancy should drift upward by 0.1%, but end 2020 down at 3.2%.

SPONSORSHIPThe loan benefits from experienced and high-quality sponsorship. The sponsor for the loan is Kushner Companies, an established and diversified New York City-based real estate development firm. The sponsor directly owns and manages the collateral. The sponsor’s portfolio is large and diverse, consisting of 21,000-plus multifamily apartments, 1,108 hotel rooms, 2.2 million sf of retail, and 5.4 million sf of office space located across the United States. The warm-body sponsor and carve-out guarantor is Seryl Kushner, who had a net worth of $252.0 million and liquidity of $19.6 million as of December 31, 2018.

Property management is provided by Kadima Management Associates, LLC, an affiliate of Kushner. The companies manage more than 2,100 apartments in popular urban residential areas of New York and Philadelphia.

DBRS MORNINGSTAR ANALYSISSITE INSPECTION SUMMARYDBRS Morningstar toured several buildings on November 11, 2019, at 11:30 a.m. with representatives of the management company. Based on the site visit, DBRS Morningstar found the properties to be in Average to Average (-) conditions.

December 2019 34



The buildings are in a desirable neighborhood in downtown Manhattan called the East Village and are within walking distance of transit, restaurants, shopping, and entertainment. The properties are also close to highways, bridges, and tunnels leading out of the city or to other boroughs. However, despite access to nearby highways, the collateral does not offer parking. Since 2007, the area has seen rapid upgrading and gentrification. The older residential buildings, with average rents on the lower end of market rent ranges in the city, provide good options for a younger demographic looking for their first apartment and others looking for a convenient and safe neighborhood with reasonable rent.

Neighborhood properties include a mix of residential uses, some with street-level retail, which are similar in age to the subject property. Subway lines are within a 10-minute walk of each property and multiple supermarkets are within walking distance of each building.

The curb appeal is typical of walk-up, prewar brick buildings in Manhattan with an average overall property condition and minor deferred maintenance visible. The buildings do not offer many common-area amenities except for secured-access exterior doors and a first-floor tenant mailbox; however, this is typical of prewar rental buildings in New York. Most market-rate units have in-unit washer and dryer pairs, some as a combination machine. No rent-controlled/stabilized units have in-unit washers and dryers; buildings with such units offer a laundry facility in the basement. The units’ kitchen appliances and cabinets dated from the most recent renovation and were in generally good condition. The bathrooms had been updated, and units were repainted as of the most recent tenant turnover. Most flooring had been updated to vinyl wood planking and carpet.

In total, the buildings have one ground-level, storefront commercial unit doing business as a barbershop with a total of 500 sf.

Low vehicle traffic was observed except on the north-south avenues and major streets, which have an abundance of stores and commercial activity. The neighborhood cross-streets are typically tree-lined with brick or concrete sidewalks.


2017 ($) 2018 ($)T-12 August 2019

($) Issuer NCF ($)

DBRS Morningstar

NCF ($)NCF Variance

(%)

GPR 4,341,236 4,367,037 4,381,630 4,449,959 4,449,959 0.0

Other Income 33,590 34,462 26,984 24,411 23,933 -2.0

Vacancy & Concessions

-212,101 -236,890 -277,722 -126,306 -225,171 78.3

EGI 4,162,725 4,164,609 4,130,892 4,348,064 4,248,720 -2.3

Expenses 1,225,281 1,216,757 1,228,476 1,318,020 1,413,600 7.3

NOI 2,937,444 2,947,852 2,902,416 3,030,044 2,835,120 -6.4

Capex 0 0 0 27,575 36,464 32.2

NCF 2,937,444 2,947,852 2,902,416 3,002,469 2,798,656 -6.8

The DBRS Morningstar NCF is based on the DBRS Morningstar North American Commercial Real Estate Property Analysis Criteria. The resulting DBRS Morningstar Stabilized NCF was $2,798,656, a variance of -6.8% from the Issuer’s NCF. The main drivers of the variance are the residential vacancy and certain operating expenses.

December 2019 35



The local residential rental market is very tight; however, DBRS Morningstar used a minimum 5% vacancy factor in contrast to the Issuer and appraisal underwriting of 2.8%. Recent history indicates a slightly higher vacancy. For the commercial space, DBRS Morningstar used a 10% vacancy factor on total commercial income. For utility expense and repairs and maintenance, DBRS Morningstar used the budgeted amounts, which are higher than historic totals. The overall DBRS Morningstar Expense Ratio was 33.4%. DBRS MORNINGSTAR VIEWPOINTDBRS Morningstar believes that the subject will perform well given the properties’ desirable location in the East Village, their asset class, and the high demand for apartments in Manhattan. The area is densely populated and has numerous restaurants, retail, and shopping. Public transportation is easily accessible for residents with several subway stations and buses within walking distance. Occupancy has been consistently in the mid-90s or better since 2017.

Management reported that it does not offer concessions in the current strong market. The loan has a moderately low LTV at 65.7% and the sponsor has owned the portfolio since 2013.

Reis projects extremely low vacancies in these submarkets. Any new construction or large-scale renovation would command much higher rentals and not be directly competitive with the subject properties.

DOWNSIDE RISKS – The buildings are mostly prewar, built between 1900 and 1920, which can increase deferred maintenance costs.

– The loan is full-term IO, which increases the risk of maturity loan default.

– Twenty residential units are subject to New York City rent-stabilization regulations. This may limit the owner’s ability to raise rents on these units, disincentivize the owner from capital investment, and prohibit deregulation to market rents through buyouts of rent-stabilized or rent-controlled tenants.

– Certain residential units are occupied in the absence of, or contrary to, the building certificate of occupancy.

STABILIZING FACTORS – The properties were renovated as recently as 2012. DBRS Morningstar noted minimal deferred maintenance at the time of the site inspections. The lender’s required escrow of $332 per unit per year and $0.15 psf are equal to the engineer’s estimates for the combined properties. The three properties are cross-collateralized and cross-defaulted. DBRS Morningstar used capex at $322 per unit and $0.20 psf, respectively, for the apartment units and commercial space.

– The loan has a moderately low LTV of 65.7% based on the appraised value, and a springing cash flow sweep if the NCF debt yields falls below 6.0% or an event of default occurs. The submarket has low vacancy, with Reis reporting 3.7% in the West Village/Downtown submarket and 3.4% in the Stuyvesant submarket.

– The loan documents include structure for recourse to the warm-body sponsor for losses that may occur against the current or prior owners regarding rent stabilization regulations.

– The loan documents include structure for recourse to the warm-body sponsor for losses that may occur against the current or prior owners regarding certificate of occupancy and use issues on residential and commercial units.

December 2019 36


COLLATERAL SUMMARY

DBRS Morningstar Property Type Office Year Built/Renovated 2019

City, State San Mateo, CA Physical Occupancy (%) 100.0

Units/SF 71,254 Physical Occupancy Date December 2019

This loan is secured by the borrower’s fee-simple interest in a four-story 71,191 sf mixed-use office and multifamily property in San Mateo, California, approximately 20 miles south of downtown San Francisco. Whole-loan proceeds of $62.5 million refinanced $47.5 million of existing construction debt, returned $6.5 million in equity to the sponsor, funded $5.6 million in reserves, and covered $2.7 million in closing costs associated with the transaction. The 10-year loan is full-term IO and represents an issuance LTV of 63.6% based on the as-is October 2019 appraised value of $98.3 million.

The sponsor acquired the land for $6.6 million in 2015 and spent the next few years re-entitling the plot of land and constructing the asset, which was completed in 2019 for a total cost basis of $68.8 million. The property is 100% leased, with the office space wholly leased by Snowflake Computing, a San Mateo-based data-warehousing startup and subsequently subleased prior to building completion to Verkada Inc., another San Mateo-based start-up offering security products. Per the appraiser, the San Mateo submarket has more than 300,000 sf of office space being constructed or renovated, and more than 85% of the space is already pre-leased. Thirteen of the subject’s 15 multifamily units are leased on 12-month leases to Verkada on a master lease, with the remaining two units being affordable units that are up for auction. The two affordable units will be leased before securitization and are to be listed at below-market rents.

San Mateo, California

405 E 4th Avenue




Loan psf/Unit ($)105

% of the Pool3.7

Loan Maturity/ARDNovember 2029

Amortizationn/a




DBRS Morningstar Property TypeOffice

DBRS Morningstar Property QualityAbove Average


Pari Passu

20.0B Note0.0

Mezz0.0

Total Debt62.5


Equity Contribution/ (Distribution) ($ Millions)($6.5)

December 2019 37


405 E 4TH AVENUE – SAN MATEO, CALIFORNIA

TENANT SUMMARY

Tenant (Office only) SF% of Total

NRA

DBRS Morningstar

Base Rent PSF ($)

% of Total DBRS Morningstar Base Rent Lease Expiry


Snowflake (subleased to Verkada) 62,338 100 80.53 100 7/2029 N

Subtotal/WA 62,338 100 80.53 100 7/2029 N

Snowflake’s lease is structured with a 12-month cash flow sweep prior to lease expiration, which will yield around $67 psf to release the subject. Snowflake originally leased the property’s office component in 2017 with a ten-year, $69.00 psf, NNN lease commencing June 2019. Snowflake outgrew the space prior to the completion of the building so it leased 200,000 sf of office space in another building and subleased the office space to Verkada in November 2019 for an increased rate of $87.00 psf. Per the sublease agreement, the landlord is entitled to 50% of the profit from the sublease. Verkada has also directly signed 12-month leases for 13 of the residential units in the building and can give back only two leased units at a time, with 60-days difference, effectively staggering the leases. The units will be occupied by employees.

SPONSORSHIP:The borrower for this transaction is Windy Hill PV Seven CM, LLC, an SPE controlled by Windy Hill Property Ventures (WHPV). WHPV is a real estate firm focused solely on the Silicon Valley and San Francisco market. WHPV has bought, repositioned and sold more than $400 million worth of assets since its inception in multifamily, commercial and mixed-use properties. It owns 15 properties worth more than $250 million. There are three carve-out guarantors, each of whom is a co-founder in WHPV. The sponsors and non-recourse carve-out guarantors for the loan are Jamie D’Alessandro, Tod Spieker and Michael Field.

Windy Hill Property Ventures also manages the subject for a contractual rate of 4.0% and 5.0% of the EGI for the office and multifamily space, respectively.

SITE INSPECTION SUMMARYDBRS Morningstar toured the property on Friday, November 8, 2019. Based on the site inspection, DBRS Morningstar found the property quality to be Above Average.

The collateral is composed of a 62,338 sf single-tenant Class A office building with 15 multifamily units in downtown San Mateo, which is approximately seven miles south of the San Francisco International Airport. The property is situated

December 2019 38



along East 4th Avenue and benefits from its proximity to Hwy. 101 and the San Mateo Caltrain station; both serve as primary arteries to the surrounding area and as primary means of commuting. The subject’s surrounding area comprises numerous restaurant offerings, older-vintage office buildings, multifamily developments and single-family homes. The subject also offers some parking; the nearby downtown San Mateo Caltrain station offers an 81-stall two-story subterranean parking garage.

Management identified several competitive office properties in the surrounding San Mateo submarket but described the collateral as unique because of its recent construction and its access to the Caltrain and covered parking. Management noted that the property was on final punch list items for the office space and received the final certificates of occupancy for the multifamily units two weeks prior. At the time of the tour, the office tenant was in the process of moving into the finished space but had set up its space only on the third floor. The unit mix of the subject is composed of six studios (528 sf/unit) and nine one-bedroom units (638 sf/unit). Each apartment had modern high-quality finishes, stainless appliances, quartz countertops, in-unit laundry and private balconies.

The collateral stands four stories tall and features a glass and brick facade accentuated by polished metal details at the street level and around the main entrance. The property’s main entrance is at the intersection of East 4th Avenue and South Claremont Street. Tenant amenities in the building include a large employee lounge with billiard games, snack pantries on each floor and a gym that is being built out. Verkada will be using all the space once it’s finished, but there were desks available for future expansion. All floors generally featured well-finished, industrial-looking décor, including open duct ceilings with hanging light fixtures and vinyl-plank floors. The space benefited from abundant natural lighting from the window-wrapped exterior. Overall, the property appeared well maintained and exhibited favorable interior and exterior appeal at the time of inspection.


Issuer NCF ($) DBRS Morningstar NCF ($) NCF Variance (%)

GPR 5,019,923 5,019,923 0.0

Recoveries 1,721,814 1,721,814 0.0

Other Income 641,820 627,300 -2.3

Vacancy -337,087 -674,174 100.0

EGI 7,046,470 6,694,864 -5.0

Expenses 1,863,696 1,870,787 0.4

NOI 5,182,774 4,824,077 -6.9

Capex 15,468 19,335 25.0

TI/LC 193,312 352,011 82.1

NCF 4,973,995 4,452,730 -10.5

The DBRS Morningstar NCF is based on the DBRS Morningstar Commercial Real Estate Property Analysis Criteria. The resulting DBRS Morningstar NCF was $4,452,730, representing a -10.5% variance from the Issuer’s NCF of $4,973,995. The primary drivers of the variance include vacancy and TI/LCs. DBRS Morningstar assumed a vacancy rate of 10.0%, which is in excess of the Issuer’s 5.0% applied vacancy. DBRS Morningstar estimated TIs based on comparable recently securitized office properties found on DBRS Viewpoint, and LCs were based on the appraiser’s assumptions of 4.0% and 2.0% on new and renewal leases, respectively. Combined, DBRS Morningstar TI/LCs were $4.94 psf compared with the Issuer’s TI/LCs of $3.10 psf.

December 2019 39



DBRS MORNINGSTAR VIEWPOINTThe collateral benefits from its transit-oriented in-fill location and mature neighborhood setting surrounded by inferior office-product competition and is heavily built out creating high barriers to new construction. Demand for Class A offices by technology companies is high in the San Mateo market, as evidenced by the subject’s ability to be leased at $69.00 psf and then subleased prior to completion for $87.00 psf, an $18 psf premium. Furthermore, the demand for the subject will be supported by the market’s difficult development restrictions, tight vacancy rates and dated market supply. Of concern, the subject is occupied by a non-investment-grade single tenant with a lease that expires in July 2029. The loan matures in November 2029, which means the single tenant rolls right before the loan matures, giving the loan an elevated level of refinance risk. The transaction has a moderate issuance LTV of 63.6%. Higher-leveraged loans historically exhibit higher default frequencies. Moreover, holding all other DBRS Morningstar NCF assumptions constant, occupancy at the property could fall to 60.0% and the DBRS Morningstar Issuance DSCR would remain slightly above 1.0x.

DOWNSIDE RISKS – The subject exhibits single-tenant risk. Loans secured by single-tenant properties have had higher loss severities in the event of a default.

– The ten-year loan is full-term IO.

STABILIZING FACTORS – The loan is structured with a cash flow sweep 12 months prior to loan maturity or if the tenant goes dark, among other events. The amount of cash flow swept will amount to around $67.00 psf for re-tenanting the office space, which is higher than the appraiser’s estimated new (non-shell) TIs of $40.00 psf. If the market’s trend of offering a relatively low level of TI allowances for second-generation space continues, the cash flow sweep should be adequate to lease up the property. In addition, Snowflake has posted a $4.1 million Letter of Credit (which will be assigned to the lender). This can burn down to $2.6 million if it goes public. Snowflake has an $8.1 million LOC from Verkada.

– As of the loan’s closing, the bor

PRESALE REPORT Citigroup Commercial Mortgage Trust 2019-C7ireportscdn.dbrs.com/presale_reports/CGCMT...

Documents

Transcript of PRESALE REPORT Citigroup Commercial Mortgage Trust 2019-C7ireportscdn.dbrs.com/presale_reports/CGCMT...