DBRS Confirms All Classes of WFRBS Commercial Mortgage Securities Trust 2013-C17

DBRS Limited (DBRS) has today confirmed all classes of WFRBS Commercial Mortgage Securities Trust 2013-C17 as follows:

-- 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 X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class X-C 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 (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 current performance of the transaction. The transaction originally closed in November 2013, consisting of 84 loans secured by 134 multifamily and commercial properties. Since issuance, the transaction has experienced a collateral reduction of 1.9% as a result of scheduled amortization, all of the original 84 loans remain current in the pool. The transaction is reporting a weighted-average (WA) debt service coverage ratio (DSCR) of 1.90 times (x) and a WA debt yield of 12.1%. The top 15 loans are performing similarly stable, with a 2.13x WA DSCR and an 11.1% WA debt yield.

As of the October 2015 remittance, there are six loans on the servicer’s watchlist, representing 5.8% of the current pool balance; however, three of the loans are on the watchlist for non-performance issues related to relatively minor deferred maintenance items. As those items are resolved, the loans are expected to be removed from the watchlist.

The largest loan on the watchlist is Prospectus ID #17 Home Depot Brush Avenue, representing 1.6% of the current pool balance. According to the servicer, it was added to the watchlist for a delinquent property tax payment. The servicer has contacted the borrower for an update. The subject is 100% occupied by Home Depot on a lease that expires in 2026. At Q2 2015, the DSCR is 2.57x and 2.66x at YE2014.

The second-largest loan on the watchlist is Prospectus ID #26 Staybridges Suites – Minot, representing 1.1% of the current pool balance. The loan is secured by a 102-room hotel located in Minot, North Dakota, an area of the country heavily reliant on oil and related industries. According to the borrower, the subject’s customer base is a mix of 60% transient business and the remaining 40% are extended stays. This loan was added to the watchlist for the declining DSCR related to lower revenue stemming from a decrease in the average daily rate (ADR). According to the servicer, the ADR has decreased 7.0% at June 2015 when compared with June 2014, as corporate accounts at the property have recently been renegotiated at lower rates in the face of increased competition and recent difficulties in the energy markets. At YE2014, the DSCR was 1.66x, but has decreased to 1.18x at Q2 2015 with an occupancy rate of 77.0%. Given the shifts in performance for the oil and gas industries, DBRS anticipates the declined performance metrics will be difficult to reverse and will continue to closely monitor the loan for updates. DBRS modeled this loan with increased probability of default and severity of loss based as a result of the continued decline evidenced in the Q2 2015 financials.

At issuance, DBRS shadow-rated one loan investment-grade, Prospectus ID#3 Westfield Mission Valley, representing 6.2% of the current pool balance. DBRS confirms with this review that the performance of this loan remains consistent with investment-grade loan characteristics.

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 loans on the servicer’s watchlist. The October 2015 Monthly CMBS 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.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodologies are North American CMBS Rating Methodology (June 2015) and CMBS North American Surveillance (January 2015), which can be found on our website under Methodologies.