Fitch Ratings has affirmed seven classes of NYT 2019-NYT Mortgage Trust Commercial Mortgage Pass-Through Certificates.

The Rating Outlooks remain Stable.

RATING ACTIONS

Entity / Debt

Rating

Prior

NYT 2019-NYT

A 62954PAA8

LT

AAAsf

Affirmed

AAAsf

B 62954PAG5

LT

AA-sf

Affirmed

AA-sf

C 62954PAJ9

LT

A-sf

Affirmed

A-sf

D 62954PAL4

LT

BBB-sf

Affirmed

BBB-sf

E 62954PAN0

LT

BB-sf

Affirmed

BB-sf

F 62954PAQ3

LT

BB-sf

Affirmed

BB-sf

X-EXT 62954PAE0

LT

BBB-sf

Affirmed

BBB-sf

Page

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VIEW ADDITIONAL RATING DETAILS

KEY RATING DRIVERS

Stable Performance: The affirmations and Stable Outlooks reflect the continued stable performance of the property. The June 2022 rent roll reflects occupancy of 90.6%, a decline from 99% at YE 2021 due to Osler, Hoskin & Harcourt (8.6% of NRA) vacating at lease expiration. The most recent servicer-reported June 2022 net cash flow (NCF) debt service coverage ratio (DSCR) was 3.28x as compared to 3.26x at YE 2021 for the interest-only loan. The sponsor has three one-year extension options remaining.

Largest tenant, Clearbridge (27.2% of NRA), and Goodwin Procter (8.5%) have indicated intentions to vacate at their respective lease expirations in 2023. A new lease has been signed with Datadog for 45% of the NRA, which is a direct lease and an expansion of existing sublease space. Datadog will occupy the vacated Clearbridge, Goodwin Procter, and Osler Hoskin floors, taking possession of space in phases as existing tenants vacate. Occupancy is expected to increase to 99% once Datadog takes full possession of space. The weighted average base rent of the new lease with Datadog is within 3% of the average in-place rent of the departing tenants. In addition, the sponsor will be contributing significant tenant improvement funds toward the buildout of space for Datadog.

Collateral Quality: The collateral represents 738,385 sf, comprised of 709,678 sf of office, 23,044 sf of ground floor retail, and 5,663 sf of storage/other space, of the 1.3 million sf New York Times Building located at 242 W. 41st Street in New York. The collateral office space includes 23 office condominium units spanning floors 28 through 52. Fitch assigned the property a quality grade of 'A-' at issuance. The property was completed in 2007, incorporating various environmentally sustainable features that promote increased energy efficiency while more than 80% of the submarket's inventory was constructed prior to 2000.

Accessible Location: The subject occupies the entire block along Eighth Avenue in between West 40th and West 41st Streets in the Times Square neighborhood of the New York CBD. The collateral features immediate access to public transportation, with the Port Authority Bus Terminal located directly across the street, and the Times Square subway station within a five-minute walk.

Institutional Sponsorship: The sponsors of the loan are owned by affiliates of Brookfield Property Partners, a global leader in real estate investment and management. Brookfield Property Partners is a publicly listed (NYSE: BPY) real estate company of Brookfield Asset Management. BPY's portfolio includes an ownership interest in approximately 140 office properties totaling 96 million sf and 115 retail properties totaling 115 million sf.

Loan Structure: The mortgage is $515.0 million, represented by the interests in four promissory notes, which, together with four junior promissory notes that are not included in the trust, evidence a two-year (with five, one-year extension options), floating-rate, whole loan secured by a first-lien mortgage on the leasehold interest of the borrower. The loan is IO for the entire term. The initial maturity date was Dec. 9, 2020; however, the borrower has exercised their second 12-month extension option through December 2022. The sponsor has three one-year extension options remaining.

High Aggregate Leverage: The $515.0 million mortgage loan has a Fitch DSCR and LTV of 1.005x and 87.5%, respectively, and debt of $697 psf. The total debt package includes a $120.0 million B-note and $115.0 million mezzanine loan, resulting in a total debt Fitch DSCR and LTV of 0.69x and 127.4%, respectively.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to negative rating action/downgrade:

A downgrade to classes A and B is not likely due to their position in the capital structure but may occur should interest shortfalls occur. A downgrade to classes C and D is possible if there is a material and sustained decline in the property's occupancy or cash flow. Classes E and F may be downgraded if the coronavirus pandemic permanently shifts New York City valuations.

Fitch has identified both a baseline and a worse-than-expected, adverse stagflation scenario based on fallout from the Russia-Ukraine war whereby growth is sharply lower amid higher inflation and interest rates; even if the adverse scenario should play out, Fitch expects virtually no impact on ratings performance, indicating very few rating or Outlook changes. However, for some transactions with concentrations in underperforming retail exposure, the ratings impact may be mild to modest, indicating some changes on sub-investment grade notes.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

Upgrades to the investment-graded classes are possible should performance of the underlying property improve significantly. The lower tranches are less likely to be upgraded, even with improved performance, given the single-property exposure and concentration risk. Classes would not be upgraded beyond 'Asf' if there is any likelihood of interest shortfalls. Defeasance and paydown would not play a role in contemplated an upgrade, given the single-borrower and non-amortizing nature of the securitized loan.

Best/Worst Case Rating Scenario

International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.

USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10

Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg

Additional information is available on www.fitchratings.com

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