DBRS Confirms All Ratings for Madison Avenue Trust 2013-650M
CMBSDBRS has today confirmed the ratings for the following classes of Commercial Mortgage Pass-Through Certificates Series 2013-650M issued by Madison Avenue Trust 2013-650M. The trends are Stable.
-- Class A at AAA (sf)
-- Class X-A 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 (low) (sf)
The confirmations reflect the property’s stable performance, which is considered in line with expectations. The collateral consists of a $675 million fixed-rate loan secured by 650 Madison Avenue, a 595,348 square foot (sf), 27-story, Class A office and retail tower built in 1957. It is considered one of the premier office towers in the Plaza District submarket because of its unobstructed views of Central Park starting at the 15th floor and its 200 feet of ground-floor retail frontage along Madison Avenue. At issuance, DBRS was aware of one tenant’s intent to vacate. The third-largest office tenant, Reservoir Capital, vacated the space upon the lease expiration date of June 30, 2014. Reservoir Capital occupied floors 22 through 26, represented 9.7% of the net rental area (NRA). A letter of intent for 7,456 sf of Reservoir Capital’s space had been submitted at the time the loan closed, and a lease was executed for this space on July 1, 2014, to Lakewood Capital Management LP through December 2020.
The office portion of the collateral is 89.5% occupied by nine tenants and the retail is 100% occupied by three tenants. Together, the subject property is currently 90.7% occupied. Polo Ralph Lauren is the larget tenant at the subject, comprising 46.4% of the NRA and 43.4% of the net rental income, and is on a long-term lease that extends more than four years beyond the loan term. The year-to-date June 2014 annualized debt service coverage ratio (DSCR) was reported to be 2.19 times (x), which reflects a 7.6% net cash flow change over the DBRS underwriting.
With a 2.05x DBRS Term DSCR, there is minimal term default risk, and with 63.3% of the NRA leased to long-term investment-grade tenants, refinance risk is considered minimal.
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.
All classes are 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 applicable methodology is CMBS Rating 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.
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