DBRS Assigns Provisional Ratings to WFRBS Commercial Mortgage Trust 2013-C17

DBRS has today assigned provisional ratings to the following classes of Commercial Mortgage Pass-Through Certificates, Series 2013-C17 (the Certificates), to be issued by WFRBS Commercial Mortgage Trust 2013-C17. The trends are Stable.

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class X-C at AAA (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (sf)
-- Class F at B (sf)

Classes X-C, D, E and F have been privately placed pursuant to Rule 144A.

The Class X-A, X-B, and X-C 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 certificates’ position within the transaction payment waterfall when determining the appropriate rating.

The collateral consists of 84 fixed-rate loans secured by 134 commercial and multifamily properties. The transaction has a balance of $904,354,517. The pool consists of relatively low-leverage financing, with a DBRS weighted-average refinance debt service coverage ratio (DSCR) of 1.23 times (x), based on a weighted-average stressed refinance constant of 9.83%. One loan, representing 6.1% of the pool, is shadow-rated investment grade, while nine properties securing loans (in whole or in part) representing 10.5% of the pool are 100% leased to a single tenant. The DBRS sample included 35 loans, representing 70.6% of the pool. Of the sampled loans, properties securing five loans (including three of the top ten loans), were given Above Average property quality, and only two loans were given Below Average property quality. DBRS considers the pool to be relatively diverse based on loan size, with a concentration profile equivalent to a pool of 33 equal-sized loans.

Sixteen hotel properties secure 22.2% of the allocated loan balance of the pool, a relatively high concentration, three of which are in the top ten. Hotel properties have higher cash flow volatility than traditional property types, as their income, which is derived from daily contracts rather than multi-year leases, and their expenses, which are often mostly fixed, are quite high as a percentage of revenue. These two factors cause revenue to fall swiftly during a downturn and cash flow to fall even faster, because of the high operating leverage. Eight loans, representing 14.2% of the pool, were considered to have weaker than average sponsor strength due to a high level of historical defaults, prior bankruptcy and/or lack of experience in the relevant property type. This concentration is greater than the comparative level of other recently rated DBRS conduit transactions, and DBRS increased the POD significantly for loans with identified sponsorship concerns.

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 Rule 17g-7 Report of Representations and Warranties is hereby incorporated by reference and can be found by clicking on the link to the right under Other Research or by contacting us at info@dbrs.com.

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