KBRA Downgrades Two Ratings and Affirms All Other Outstanding Ratings for MSC 2019-NUGS
23 Oct 2026 | New York
KBRA downgrades the ratings of two classes of certificates and affirms all other outstanding ratings for MSC 2019-NUGS, a CMBS SASB transaction. The downgrades reflect the significant increase in interest shortfalls, and continued decline in KNCF and value of the loan collateral, Wells Fargo Center, since KBRA’s last review. We also considered the loan’s specially serviced status, the updated lower appraised value, and the continued deterioration in the Denver office submarket. There is a $203.0 million ARA and a $17.4 million cumulative ASER as of October 2026. Cumulative interest shortfalls total $17.4 million, affecting all outstanding certificate classes, including Class A, which is receiving about 63% of its monthly accrued interest distribution. Interest shortfalls may continue 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 exercise its remaining extension options when the loan matured in December 2022, resulting in a transfer to special servicing. The loan’s current status is performing matured. The sponsors of the borrower are Beacon Capital Partners and Brookfield Strategic Real Estate Partners. A receiver was appointed in August 2023 and currently manages the property. The special servicer and receiver evaluated a potential sale but determined that current Denver CBD market conditions were not conducive to maximizing recovery to the trust. The special servicer is pursuing a competitive leasing strategy to attract new tenants and retain existing tenants.
KBRA analyzed the cash flow for the property utilizing information from the trustee and servicer to determine KNCF. The analysis produced a KNCF of $9.0 million and a KBRA value of $82.1 million ($67 per sf). The resulting in-trust KLTV on the senior note is 337.5%, up from 249.9% at last review and 90.7% at securitization. KBRA maintains the loan’s K-LOC status and KPO of Underperform.
Details concerning the classes with a rating adjustment are as follows:
- Class A to C (sf) from CCC (sf)
- Class B to C (sf) from CC (sf)
KBRA affirms the following ratings
- Class C at C (sf)
- Class D at C (sf)
- Class E at C (sf)
- Class F at C (sf)
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