KBRA Downgrades All Ratings for MSC 2019-NUGS
14 Mar 2025 | New York
KBRA downgrades the ratings of all classes of MSC 2019-NUGS, a CMBS SASB transaction. The downgrades reflect the continued decline in KNCF and value of the loan collateral, Wells Fargo Center, since KBRA’s last ratings adjustments in March 2024. We also considered the loan’s specially serviced status, the updated appraised value, the ongoing interest shortfalls affecting classes C, D, E, and F, and the deterioration in the Denver office submarket. The loan was transferred to the special servicer in December 2022 for maturity default. There is a $113.8 million ARA and a $2.4 million cumulative ASER as of February 2025. Interest shortfalls may affect classes A and B in the future as the special servicer works to resolve the loan.
The transaction collateral is a $277.1 million portion of a $327.7 million non-recourse, first-lien mortgage loan secured by the borrower’s fee simple interests in Wells Fargo Center, a 52-story LEED Gold-certified Class A office building with 1.2 million sf, plus a 12-story parking garage, in Denver, Colorado. The trust collateral is a $277.1 million senior A note. The non-trust collateral consists of $50.6 million of subordinate B notes. There is also $45.3 million of existing mezzanine debt held outside the trust. The floating-rate IO loan had an initial two-year term that ended in December 2021 with three one-year extension options.
The borrower extended the loan until December 2022 and had two extension options remaining. However, the borrower did not extend the loan when it reached maturity at the end of 2022, and it was transferred to special servicing as a matured performing loan in December. The sponsors of the borrower are Beacon Capital Partners and Brookfield Strategic Real Estate Partners, but a receiver was appointed in August 2023 and is currently managing the property.
KBRA analyzed the cash flow for the property utilizing information from the trustee and servicer to determine KNCF. The analysis produced a KNCF of $12.8 million and a KBRA value of $138.2 million ($113 per sf). The resulting in-trust KLTV on the senior note is 200.5%, up from 123.2% at last review and 90.7% at securitization. KBRA maintains the loan’s K-LOC status and KPO of Underperform.
Details regarding the classes with rating changes are as follows:
- Class A to BBB- (sf) from AA (sf)
- Class B to B- (sf) from A (sf)
- Class C to CCC (sf) from BBB (sf)
- Class D to CC (sf) from BB- (sf)
- Class E to C (sf) from B- (sf)
- Class F to C (sf) from CCC (sf)
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