KBRA Downgrades Five Ratings and Affirms All Other Ratings for MRCD 2019-PARK

KBRA downgrades the ratings of five classes of certificates and affirms all other ratings for MRCD 2019-PARK, a CMBS single-borrower transaction. The rating actions reflect the increased risk of interest shortfalls and principal loss as the special servicer works to resolve the loan. The loan was transferred to the special servicer in March 2024 for imminent maturity default and subsequently failed to pay off at its December 2024 maturity. The special servicer had approved a plan and loan modification to stabilize the property that included two one-year extension options. However, during the December 2024 remittance period, the special servicer reported that the modification failed to close, and the lender has begun to enforce the remedies which may include receivership, foreclosure and/or action against the guarantor.

The transaction collateral consists of a $955.0 million portion of a $1.5 billion non-recourse, first lien mortgage. The whole mortgage loan is represented by eight pari passu A notes totaling $547.0 million, a subordinate B note totaling $708.0 million, and a subordinate C note totaling $245.0 million. The trust collateral includes one senior A note totaling $247.0 million and the $708.0 subordinate B note. The non-trust collateral consists of the remaining seven pari passu A notes totaling $300.0 million that were contributed to seven other CMBS conduit securitizations, three of which are rated by KBRA. The C note was contributed to MRCD 2019-PRKC, a SASB transaction not rated by KBRA. The loan is collateralized by the borrower’s fee simple interest in 3,165 units of the 3,221-unit Parkmerced multifamily complex in San Francisco, California. The collateral property encompasses 11 high-rise apartment towers and 154 townhouse buildings, as well as 10 common area amenity buildings. The property spans 152 acres and is reportedly the largest single multifamily property in San Francisco.

The review utilized information obtained from the trustee and servicer to analyze the loan collateral. KBRA performed a stabilized analysis to derive KNCF, property value, and KLTV. The analysis produced a stabilized KNCF of $46.0 million and a stabilized KBRA value of $713.4 million ($225,409 per unit). The resulting KLTV is 175.9%, up from 167.1% at the last ratings change in January 2023, and up from 129.4% at securitization. KBRA’s stabilized value takes into consideration the complexity and length of time required if a receivership and foreclosure process was necessary to resolve the loan. KBRA maintains the loan’s K-LOC designation and its KPO of Underperform due to the status with the special servicer, maturity default, and the decline in financial performance and occupancy since issuance.

Details concerning the classes with ratings changes are as follows:

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