Morningstar DBRS Confirms All Credit Ratings on BX Trust 2019-IMC

DBRS, Inc. (Morningstar DBRS) confirmed its credit ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2019-IMC issued by BX Trust 2019-IMC as follows:

-- Class A at AAA (sf)
-- Class B at AAA (sf)
-- Class C at AAA (sf)
-- Class D at AAA (sf)
-- Class X-NCP at AAA (sf)
-- Class E at A (sf)
-- Class F at BBB (low) (sf)
-- Class G at B (high) (sf)
-- Class HRR at B (low) (sf)

All trends are Stable.

The credit rating confirmations reflect the relatively stable performance of the transaction since the last credit rating action in June 2024. While the trailing 12-month (T-12) period ended September 30, 2024, net cash flow (NCF) was down 7.2% compared with the YE2023 NCF, the loan continues to benefit from deleveraging following the $175.0 million principal payment received in April 2024 as part of the loan's maturity extension to June 2026. Despite the decrease in cash flow, the loan reported a debt service coverage ratio of 1.19 times for the T-12 period ended September 30, 2024. The transaction is secured by a portfolio of 16 properties comprising 9.6 million square feet (sf) of premier showroom space across two campuses (or markets) in High Point, North Carolina, and Las Vegas. This unique property type is susceptible to high cash flow volatility because of the short-term nature of its lease contracts, the majority of which are less than 12 months. According to the most recent servicer-reported financial figures, the NCF declined to $103.6 million as of the T-12 period ended September 30, 2024, compared with the YE2023 NCF of $111.5 million.

At the previous credit rating action in June 2024, Morningstar DBRS downgraded its credit ratings on Classes E, F, G, and HRR to reflect the increased credit risk as exhibited in the downward pressure in the loan-to-value (LTV) sizing benchmarks following updates to the analysis. This includes an updated Morningstar DBRS NCF of $109.3 million based on a haircut to the YE2023 figure. For this review, Morningstar DBRS updated its value to $967.0 million, which reflects a 45.0% decline from the July 2024 appraised value of $1.76 billion. The value was based on Morningstar DBRS' NCF of $101.5 million, derived from a 2% haircut to the NCF as of the T-12 period ended September 30, 2024, and a capitalization rate of 10.5%. The Morningstar DBRS value reflects an LTV of 100.8%. Morningstar DBRS also maintained positive qualitative adjustments to the LTV sizing benchmarks totaling 3.50% to reflect the property quality, market fundamentals, and cash flow volatility, given the collateral's identity as one of the premier furniture, design, and showroom spaces in the U.S.

The loan is sponsored by affiliates of Blackstone Inc. (Blackstone). Blackstone began purchasing individual properties in the High Point market in 2011 and has owned all of the collateral properties since 2017 when it purchased the three World Market Center properties in Las Vegas and the 2.66 million-sf International Home Furnishings Center in High Point. Property management is provided by International Market Centers, Inc., an affiliate of Blackstone and the largest operator of premier showroom space for the furniture, gift, home decor, rug, and apparel industries in the world. Including its ownership of the noncollateral AmericasMart Atlanta, the sponsor owns the majority of the Class A showroom space throughout the U.S. At loan closing, Blackstone maintained $400.0 million of cash equity in the transaction. The loan had an original final maturity in April 2024 but was modified, extending the loan term to June 2026, and received a principal paydown of $175.0 million, reducing the transaction balance by about 15.0% and notably increasing credit support for the senior portion of the trust debt.

The collateral represents 88.0% and 92.7% of the Class A trade show and showroom space in the High Point and Las Vegas markets, respectively, with the allocated loan balance split between the 13 High Point properties (50.1%) and the three Las Vegas properties (49.9%). Each market holds biannual home and furnishings trade shows, staggered so that an event occurs once every quarter throughout the year, with the spring and fall events held in High Point and the summer and winter events held in Las Vegas. The High Point market is convenient for its proximity to manufacturers, while the Las Vegas market serves as a regional hub for buyers in the western U.S. The quarterly events are positioned as business-to-business trade shows focused on the home furnishings and decor as well as gift industries. The events provide an efficient channel for buyers to access and view products in the highly fragmented industries with thousands of manufacturers and more than 60,000 commercial buyers attending each event. The attendance and pre-registration figures provided for the 2023 and early 2024 events remain in line with the figures previously reported for the 2022 and early 2023 events, with attendance figures indicating a continued demand for in-person trade shows, which is the most important demand driver for the collateral.

The Morningstar DBRS credit rating assigned to Class G is higher than the results implied by the LTV sizing benchmarks. This variance is warranted given the collateral's steady performance and ability to maintain value, as evidenced by the updated appraisal value reflecting a marginal increase in the collateral value since issuance, as well as the recent significant cash equity infusion by the sponsor.

Morningstar DBRS' credit ratings on the applicable classes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transactions' respective press releases at issuance.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS   
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024), https://dbrs.morningstar.com/research/437781

Class X-NCP is an interest-only (IO) certificate that references a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated applicable reference obligation tranche adjusted upward by one notch if senior in the waterfall.

All credit ratings are subject to surveillance, which could result in credit ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by Morningstar DBRS.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is North American CMBS Surveillance Methodology (February 28, 2025), https://dbrs.morningstar.com/research/448963

Other methodologies referenced in this transaction are listed at the end of this press release.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

DBRS, Inc.
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Chicago, IL 60602 USA
Tel. +1 312 332-3429

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

-- North American Single-Asset/Single-Borrower Ratings Methodology (February 28, 2025), https://dbrs.morningstar.com/research/448962
-- Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (September 19, 2024), https://dbrs.morningstar.com/research/439702
-- Legal Criteria for U.S. Structured Finance (December 3, 2024), https://dbrs.morningstar.com/research/444064
-- Interest Rate Stresses for U.S. Structured Finance Transactions (March 27, 2025), https://dbrs.morningstar.com/research/450750
-- North American Commercial Mortgage Servicer Rankings (August 23, 2024), https://dbrs.morningstar.com/research/438283

For more information on this credit or on this industry, visit https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.