J.P. Morgan Chase Commercial Mortgage Securities Trust 2019-OSB
Rating Action: Moody's assigns definitive ratings to six CMBS classes of J.P. Morgan Chase Commercial Mortgage Securities Trust 2019-OSB
SEC Rule 17g-7 Report of R&Ws: J.P. Morgan Chase Commercial Mortgage Securities Trust 2019-OSB Deal v1.1 Compared To CMBS - Single Borrower/Large Loan v2.0
Rating Action: Moody's assigns a provisional rating to One CMBS class of J.P. Morgan Chase Commercial Mortgage Securities Trust 2019-OSB
CMBS Pre-Sale Supplement: JPMCC 2019-OSB - Pre-Sale Excel Supplement
Pre-Sale Report: JPMCC 2019-OSB Mortgage Trust: Pre-Sale – $395.0 million CMBS large loan transaction
Moody's assigns provisional ratings to six CMBS classes of J.P. Morgan Chase Commercial Mortgage Securities Trust 2019-OSB
Approximately $327.3 million of structured securities affected
New York, May 28, 2019 -- Moody's Investors Service, ("Moody's") has assigned provisional ratings to six classes of CMBS securities, issued by J.P. Morgan Chase Commercial Mortgage Securities Trust 2019-OSB, Commercial Mortgage Pass-Through Certificates, Series 2019-OSB:
Cl. A, Assigned (P)Aaa (sf)
Cl. X-A*, Assigned (P)Aaa (sf)
Cl. X-B*, Assigned (P)Aa3 (sf)
Cl. B, Assigned (P)Aa3 (sf)
Cl. C, Assigned (P)A3 (sf)
Cl. D, Assigned (P)Baa3 (sf)
* Reflects interest-only classes
The certificates is backed by a single fixed-rate loan collateralized by the borrowers' leasehold interests in the complex known as Osborn Triangle, which consists of three lab-office facilities, identified as 610 Main Street North (278,738 SF), 1 Portland Street (229,330 SF) and 700 Main Street (168,879 SF) along with a 650-stall parking garage.
The collateral is secured by leasehold interests in the three Osborn Triangle properties shown below:
1. 610 Main Street North is a three to seven-story, 278,738 SF, Class A lab-office building developed in 2016. The building is LEED gold certified and designed with environmentally responsible features such as electric vehicle charging stations, a reflective roof, as well as water efficient fixtures and irrigation. The property features 270 allocated parking spaces within Osborn Triangle's three-level, subterranean parking garage. The property is 100.0% leased to Pfizer (270,056 SF) and four small street retailers (8,682 SF), which are Sulmona, Café Luna, Revela and Boston Burger Company. Pfizer subleases 60.6% of its NRA to four subtenants - CRISPR Therapeutics, Lab Central, Casebia Therapeutics, and KSQ Therapeutics. These subtenants operate symbiotically, all members of technological gene editing and new drug discovery space. Weighted average rent payments under Pfizer's lease commenced in November 2016 (138,326 SF) and June 2016 (130,844 SF) at $73.48 PSF triple-net rents.
2. 1 Portland Street is a seven-story, 229,330 SF, Class A lab-office building developed in 2013. The property is solely leased to Pfizer, which has invested more than $27.0 million into their spaces at this property and 610 Main Street North. Pfizer is currently paying rent of $67.99 PSF triple-net. The property features one general three-bay loading dock, one vivarium-specific loading dock accessible via a private road, and a small café called The Main Cup. Tenants also have use of 229 allocated parking spaces within Osborn Triangle's three-level, subterranean parking garage.
3. 700 Main Street is a three to five-story, 168,879 SF, Class A lab-office building that was converted from an industrial building in 2002 and fully renovated in 2012. The property is comprised of two sections that are connected by a two-story hallway, set around Watson Court, Osborn Triangle's central green space. There are two tailgate docks and one drive-up dock located along Albany street and 151 allocated parking spaces within Osborn Triangle's three-level, subterranean parking garage. The property is currently 100.0% leased to Novartis and Lab Central. Novartis is currently paying $55.15 PSF in triple-net rent while Lab Central is currently paying a weighted average rent of $55.85 PSF triple-net.
Moody's approach to rating this transaction involved the application of both our Large Loan and Single Asset/Single Borrower CMBS methodology and our IO Rating methodology. The rating approach for securities backed by a single loan compares the credit risk inherent in the underlying collateral with the credit protection offered by the structure. The structure's credit enhancement is quantified by the maximum deterioration in property value that the securities are able to withstand under various stress scenarios without causing an increase in the expected loss for various rating levels. In assigning single borrower ratings, we also consider a range of qualitative issues as well as the transaction's structural and legal aspects.
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 LTV ratio.
The first mortgage balance of $575,000,000 represents a Moody's LTV of 95.5%. The Moody's First Mortgage Actual DSCR is 2.27X and Moody's First Mortgage Actual Stressed DSCR is 0.93X.
Notable strengths of the transaction include: strategic location and life science fundamentals, strong occupancy and tenancy and institutional sponsorship.
Notable credit challenges of the transaction include: lack of diversification, interest-only mortgage loan profile, and credit negative legal features.
The principal methodology used in rating all classes except interest-only classes was "Moody's Approach to Rating Large Loan and Single Asset/Single Borrower CMBS" published in July 2017. The methodologies used in rating interest-only classes were "Moody's Approach to Rating Large Loan and Single Asset/Single Borrower CMBS" published in July 2017 and "Moody's Approach to Rating Structured Finance Interest-Only (IO) Securities" published in February 2019. Please see the list of ratings at the top of this announcement to identify which classes are interest-only (indicated by the *). Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.
Moody's approach for single borrower and large loan multi-borrower transactions evaluates credit enhancement levels based on an aggregation of adjusted loan level proceeds derived from our Moody's loan level LTV ratios. Major adjustments to determining proceeds include leverage, loan structure, and property type. These aggregated proceeds are then further adjusted for any pooling benefits associated with loan level diversity, other concentrations and correlations.
Moody's analysis considers the following inputs to calculate the proposed IO rating based on the published methodology: original and current bond ratings and credit estimates; original and current bond balances grossed up for losses for all bonds the IO(s) reference(s) within the transaction; and IO type corresponding to an IO type as defined in the published methodology.
These ratings: (a) are based solely on information in the public domain and/or information communicated to Moody's by the issuer at the date it was prepared and such information has not been independently verified by Moody's; (b) must be construed solely as a statement of opinion and not a statement of fact or an offer, invitation, inducement or recommendation to purchase, sell or hold any securities or otherwise act in relation to the issuer or any other entity or in connection with any other matter. Moody's does not guarantee or make any representation or warranty as to the correctness of any information, rating or communication relating to the issuer. Moody's shall not be liable in contract, tort, statutory duty or otherwise to the issuer or any other third party for any loss, injury or cost caused to the issuer or any other third party, in whole or in part, including by any negligence (but excluding fraud, dishonesty and/or willful misconduct or any other type of liability that by law cannot be excluded) on the part of, or any contingency beyond the control of Moody's, or any of its employees or agents, including any losses arising from or in connection with the procurement, compilation, analysis, interpretation, communication, dissemination, or delivery of any information or rating relating to the issuer.
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 may indicate that the collateral's credit quality is stronger or weaker than Moody's had previously anticipated. Factors that may cause an upgrade of the ratings include significant loan pay downs or amortization, an increase in the pool's share of defeasance or overall improved pool performance. Factors that may cause a downgrade of the ratings include a decline in the overall performance of the pool, loan concentration, increased expected losses from specially serviced and troubled loans or interest shortfalls.
Our ratings address only the credit risks associated with the transaction. Other non-credit risks have not been addressed and may have a significant effect on yield to investors.
Further information on the representations and warranties and enforcement mechanisms available to investors are available on http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1176860.
Moody's quantitative analysis entails an evaluation of scenarios that stress factors contributing to sensitivity of ratings and take into account the likelihood of severe collateral losses or impaired cash flows. Moody's weights the impact on the rated instruments based on its assumptions of the likelihood of the events in such scenarios occurring.
Randy Goldstein
AVP-Analyst
Joseph Podvarney, CFA
Vice President - Senior Analyst