DBRS Confirms Ratings of Morgan Stanley Bank of America Merrill Lynch Trust 2013-C9

DBRS Limited (DBRS) has today confirmed the ratings of Morgan Stanley Bank of America Merrill Lynch Trust 2013-C9 as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-3FL at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-AB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (sf)
-- Class D at BBB (sf)
-- Class E at BBB (low) (sf)
-- Class F at BB (high) (sf)
-- Class G at BB (low) (sf)
-- Class H at B (low) (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class A-3FX at AAA (sf)
-- Class PST at A (sf)

All trends are Stable.

DBRS does not rate the first loss piece, Class J. The Class A-3FX certificates are exchangeable with the Class A-3FL certificates (and vice versa), and the Class PST certificates are exchangeable with the Class A-S, Class B and Class C certificates (and vice versa).

The rating confirmations reflect the overall stability of the pool, which has experienced a collateral reduction of 1.7% since issuance as a result of scheduled loan amortization. At issuance, the pool consisted of 60 fixed-rate loans secured by 77 commercial properties. As of the March 2015 remittance, all of the original 60 loans remain in the pool with an aggregate outstanding principal balance of $1,254.6 million. The top 15 loans continue to exhibit stable performance with a weighted-average (WA) debt service coverage ratio (DSCR) of 1.53 times (x), based on the most recent year-end reporting available for the individual loans. As of the March 2015 remittance, there are no loans in special servicing and four loans on the servicer’s watchlist, representing 6.6% of the current pool balance. Two of the most pivotal loans on the watchlist are highlighted below.

The Apthorp Retail Condominium (Prospectus ID#5, representing 5.0% of the current pool balance) loan is secured by the borrower’s fee interest in the retail component of The Apthorp luxury residential condominium located in New York City. The loan was added to the watchlist because of a decline in performance, as the YE2013 DSCR was reported to be 0.81x compared with the DBRS underwritten DSCR of 1.19x. The servicer has attributed the low DSCR to a period of decreased occupancy as the property was fully leased for only part of the year and the reduced rental income was a result of the rental abatement granted to the largest tenant. According to the December 2013 rent roll, the property was 100% occupied, with the largest tenant, JP Morgan Chase Bank, representing 55.7% of the net rentable area (NRA) on a lease scheduled to expire in December 2029. The tenant was granted a rental abatement through January 2015 and has since been paying full rent at the property. It is expected that the DSCR will improve during the 2015 fiscal year in line with DBRS underwritten DSCR, as a full year of performance at the increased rental rate will be realized for the largest tenant. DBRS will continue to monitor this loan.

The Bethesda Walk loan (Prospectus ID#34, representing 0.7% of the current pool balance) is secured by an anchored retail property in Lawrenceville, Georgia, located approximately 25 miles northeast of the Atlanta central business district. The loan has been on the servicer’s watchlist since February 2014 as a result of two tenants, representing approximately 7.0% of the NRA, not paying rent. According to the December 2014 rent roll, the property was 90.6% occupied, with one of the two tenants in question having already vacated the property; however, the second tenant, Caiden Beauty Supply (4.7% of the NRA) still appears on the rent roll. Its lease does not expire until December 2017, and DBRS is following up with the servicer to determine whether or not the borrower will be terminating the lease and market the space for new tenants. The subject benefits from being anchored by a Wal-Mart neighborhood center, representing 64.8% of the NRA on a lease expiring in May 2027. The neighborhood center concept is characterized by its smaller footprint and its focus on grocery and everyday items. DBRS will also continue to monitor this loan.

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 watchlist. The April 2015 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 North American CMBS Rating Methodology (March 2015) and CMBS North American Surveillance (January 2015), which can be found on our website under Methodologies.