DBRS Upgrades Three Classes of A10 Securitization 2013-1, LLC

DBRS, Inc. (DBRS) has today upgraded the following Fixed Rate Notes issued by A10 Securitization 2013-1, LLC.

-- Class B to A (high) (sf) from A (sf)
-- Class C to BBB (high) (sf) from BBB (sf)
-- Class D to BBB (sf) from BBB (low) (sf)

Additionally, DBRS has confirmed the remaining classes in the transaction as follows:

-- Class A at AAA (sf)
-- Class E at BB (sf)
-- Class F at B (sf)

All trends are Stable.

The rating upgrades reflect the increased credit enhancement to the transaction as a result of successful loan repayment. Since the transaction closed in April 2013, 16 loans have been repaid in full, with the collateral now consisting of five loans secured by traditional commercial real estate, including office, retail and industrial properties. As a result of the loan repayment, there has been total collateral reduction of 64.2%. The remaining loans benefit from low leverage on a per unit basis, and the weighted-average debt yield based on the most recent net operating income and outstanding trust balance is approximately 13.9%, which is relatively strong given the pool consists of stabilizing assets.

All of the collateral loans were originated by A10 Capital, LLC (A10). A10 specializes in mini-perm loans, which typically have two- to five-year terms and are used to finance properties until they are fully stabilized. The borrowers are typically new equity sponsors of fairly well-positioned assets within their respective markets. A10’s initial advance is the senior debt component typically for the purchase of a real estate-owned acquisition or discounted payoff loans. Most loans are structured with three-year terms and include built-in extensions and future funding facilities meant to aid in property stabilization, both of which are at the lender’s sole discretion. According to the most recent reporting, a majority of the collateral assets in the subject pool have not yet reached stabilization.

The transaction is concentrated, as the largest loan represents 51.1% of the current pool balance based on the fully funded loan amount, and the largest three loans represent 90.8% of the current pool balance based on their fully funded loan amounts. None of the loans in the pool have initial maturity dates prior to April 1, 2015. The remaining loans have future funding facilities remaining between $400,000 and $5.4 million.

The ratings assigned by DBRS contemplate timely payments of distributable interest and, in the case of the Offered Notes other than the Class A Notes, ultimate recovery of Deferred Collateralized Note Interest Amounts (inclusive of interest payable thereon at the applicable rate, to the extent permitted by law). The transaction is a standard sequential pay waterfall.

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 and CMBS North American Surveillance, 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.