DBRS Confirms All Classes of COMM 2013-CCRE11 Mortgage Trust, Stable Trends

DBRS has today confirmed the following classes of Commercial Mortgage Pass-Through Certificates, Series 2013-CCRE11 (the Certificates) issued by COMM-2013 CCRE11 Mortgage Trust as follows:

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

All trends are Stable. DBRS does not rate the first loss piece, Class G.

The rating confirmations reflect the overall stable performance of the pool since issuance. The pool consists of 46 loans secured by 82 commercial properties. Since issuance, the transaction has experienced collateral reduction of 0.40% as a result of scheduled loan amortization. According to YE2013 reporting, the pool has a weighted-average (WA) debt service coverage ratio (DSCR) and WA Exit Debt Yield of 1.62 times (x) and 9.64%, respectively.

The One & Only Palmilla (Prospectus ID#3, 7.1% of the current pool balance) is secured by a first priority in the security trust, which was established to hold the real and personal property for the One & Only Palmilla Resort, a luxury hotel with 173 rooms located in Mexico’s Baja California peninsula. On September 14, 2014, Hurricane Odile made landfall on the Baja peninsula, causing widespread damage to the area and to the subject property. According to the property’s website, there were no guests present at the time of the storm as they had all been evacuated. The hotel will be closed for the foreseeable future, and the hotel operator is expected to make an upcoming announcement regarding whether or not the property will re-open for the December holiday season. DBRS has confirmed that the current insurance policy provides full coverage for windstorm damage and 18 months of business interruption proceeds, with the loss amount capped at the policy limit of $150 million. According to the servicer, the initial estimate for the cost of repairs is approximately $100 million and the timeline for total completion is four to six months. The deductible is to be calculated at 2.0% of total property damage. Although the cost of repairs seems high, given the trust loan’s outstanding balance of $90 million, the sponsors are well capitalized and the property has had strong historical performance, outperforming its competitive set with an occupancy rate of 75.2%, an average daily rate of $684 and a revenue per available room of $788 for the trailing 12-month period ending June 30, 2014. DBRS will continue to monitor the property-level repairs and loan performance.

As of September 2014 remittance, there were seven loans on the servicer’s watchlist, representing 6.35% of the current pool balance.

The largest of the seven loans, Parkview Tower (Prospectus ID#12, 2.37% of the current pool balance) is secured by the fee simple interest in a ten-story Class B office building located in King of Prussia, Pennsylvania. The loan was placed on the watchlist in July 2014 for a low DSCR of 0.85x as of the YE2013 reporting. The low coverage is a result of a eight tenants with new leases signed in 2013, which were offered concessions in the form of rent abatement periods. As of YE2013, rental concessions totaled approximately $490,000 in lost income. At issuance, the loan was structured with a Rental Concession Reserve that had an upfront balance of $336,655. As of September 2014, the remaining balance in this reserve totaled approximately $6,000. The majority of these rent abatement periods have burned off, and DBRS expects the cash flow to stabilize in the subsequent reporting periods.

At issuance, DBRS assigned investment-grade shadow ratings to three loans. DBRS has today confirmed that the performance of these three loans, representing 16.2% of the pool balance, remains consistent with investment-grade loan characteristics and has confirmed the shadow ratings.

DBRS continues to monitor this transaction in its Monthly CMBS Surveillance Report, with additional information on the DBRS viewpoint for this transaction, including details on the largest loans in the pool and the loans on the servicer’s watchlist. The September 2014 Monthly Surveillance Report for this transaction will be published shortly. If you are interested in receiving this report, contact us at info@dbrs.com.

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 methodologies are CMBS Rating Methodology and CMBS North American Surveillance Methodology, which can be found on our website under Methodologies.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.