DBRS Assigns Provisional Ratings to BAMLL Commercial Mortgage Securities Trust 2013-WBRK

DBRS has today assigned provisional ratings to the following classes of Commercial Mortgage Pass-Through Certificates, Series 2013-WBRK (the Certificates), to be issued by the BAMLL Commercial Mortgage Securities Trust 2013-WBRK. The trends are Stable.

-- Class A at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (high) (sf)

All classes have been privately placed pursuant to Rule 144A.

The Class X-A and Class X-B balances are notional. DBRS ratings on interest-only certificates address the likelihood of receiving interest based on the notional amount outstanding. DBRS considers the interest-only certificate’s position within the transaction payment waterfall when determining the appropriate rating.

The collateral for the transaction consists of the fee and leasehold interest in an enclosed, partial two-story super-regional mall located in Wayne, New Jersey. The fee interest consists of 463,774 square feet (sf) of major tenant and in-line space, currently occupied by 133 national and regional tenants. The leasehold interest consists of 28,875 sf of in-line space subject to a long-term ground lease with Lord & Taylor. The anchor tenants, Bloomingdale’s, Macy’s, Lord & Taylor and Sears, do not serve as collateral for the loan. The property is directly owned by General Growth Properties, Inc. (GGP), and will be managed by an affiliate of the borrower. Proceeds from the loan will be used to retire the existing debt and return $210 million to GGP.

Willowbrook Mall has performed very well historically, with occupancy averaging 98.8% since 2007. As of the January 31, 2013, rent roll, the collateral was 97.5% leased. Sales productivity is quite strong, with YE2012 sales for in-line tenants less than 10,000 sf (excluding Apple) of $625 per square foot (psf). This represents a 13% increase over the YE2011 level. In 2012, 38 tenants reported sales in excess of $900 psf. While not collateral for the loan, the anchor tenants perform very well, with the stores generating estimated annual sales volumes of between $25 million and $88 million.

The loan is interest only during the entire 12-year loan term. Although the loan does not amortize, the going-in leverage is relatively low, with the DBRS Debt Yield at 9.0%. In addition, the DBRS Refi debt service coverage ratio (DSCR) is a healthy 1.20 times (x), based on a stressed 7.50% refinance constant that implies a 6.07% interest rate and a 30-year amortization schedule. This stressed refinance rate is 2.52% above the current loan’s interest rate of 3.55%. The loan has minimal default risk during the ten-year loan term, as the DBRS Term DSCR is quite high at 2.40x, with no individual tenant contributing more than 3.2% of total income. DBRS value, a 28.7% discount to the appraised value, results in a modest DBRS loan-to-value (LTV) of 80.8%.

As a result of the quality of the asset, a high-profile tenant roster with strong market demand, strong sales, consistent historical occupancy and a strong sponsor, the Certificates backed by the $360 million first mortgage debt are provisionally assigned ratings between AAA (sf) and BB (high) (sf). The transaction is a sequential-pay structure.

The ratings assigned to the Certificates by DBRS are based exclusively on the credit provided by the transaction structure and underlying trust assets. All classes will be subject to ongoing surveillance, which could result in upgrades or downgrades by DBRS after the date of issuance.

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

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodology is CMBS Rating Methodology (January 2012), which can be found on our website under Methodologies.