DBRS Confirms All Classes of BAMLL Commercial Mortgage Securities Trust 2013-WBRK

DBRS Limited (DBRS) has today confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2013-WBRK issued by BAMLL Commercial Mortgage Securities Trust 2013-WBRK as follows:

-- Class 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 (high) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction. The transaction consists of a $360 million interest-only loan secured by the fee and leasehold interest in Willowbrook Mall, an enclosed, partial two-story super-regional mall located in Wayne, New Jersey. The fee interest consists of approximately 495,000 square feet (sf) of major tenant and in-line space, while the leasehold interest consists of approximately 28,000 sf of in-line space subject to a long-term ground lease with Lord & Taylor. The mall is anchored by Bloomingdale’s, Macy’s, Lord & Taylor and Sears, which do not serve as collateral for the loan. The property is well located with a population of 1.4 million within a ten-mile radius as at 2016, coupled with strong income demographics as the median household income was $70,450 within a ten-mile radius and $89,569 within a five-mile radius of the property. The loan is sponsored by General Growth Properties and the property is managed by an affiliate of the sponsor.

According to a June 2015 news article published by NorthJersey.com, the property underwent a renovation project to revitalize the look of the mall and per the property’s website, all renovation work has been completed. The improvements included new flooring, new vaulted ceilings, a redesigned food court, new charging stations for electronics, new glass railings, interior landscaping, new paint finishes and new upgraded restrooms and seating areas. DBRS has requested the cost of the upgrades and a response is currently outstanding as of the date of this press release; however, according to a July 2015 news article by Chron.com, the cost was estimated to exceed $10 million.

The property continues to exhibit strong occupancy rates with a collateral occupancy rate of 97.9% and total mall occupancy of 99.3%, as reported by the September 2016 rent roll. The major tenants include The Gap, Inc./GapKids/babyGap (3.8% of net rentable area (NRA), with the lease expiring in September 2024), Forever XX1 (3.1% of NRA, with the lease expiring in January 2019) and Express (2.8% of NRA, with the lease expiring in January 2024). Old Navy originally had a lease expiration of January 2017, but renewed its lease through July 2027, as part of a relocation into the former Zara space, reducing Old Navy’s footprint to 1.5%, from 5.0% of the NRA. Old Navy’s former space is currently vacant as illustrated in the mall’s online directory. DBRS has requested a leasing update from the servicer and a response is currently pending as of the date of this press release.

Tenants representing 18.1% of the NRA have leases that have recently expired or will be expiring within the next six months. Of those tenants, DBRS notes that shops representing 8.3% of NRA with 2016 or January 2017 lease expirations were either still listed in the directory or will be replaced by a new tenant paying a higher rental rate (as confirmed by information forwarded by the servicer). According to CoStar, retail properties located within the Passaic Route 46/23 submarket of Northern New Jersey reported a vacancy rate of 6.8% as of February 2017, which increased from the Q1 2016 vacancy rate of 5.7%.

The tenant sales report for the trailing 12-month (T-12) period ending September 2016 showed consistency in overall in-line sales performance for the property as compared with the YE2015 figures. According to that report, tenants occupying less than 10,000 sf reported T-12 sales of $762 per square foot (psf), flat from YE2015, and tenants occupying more than 10,000 sf reported T-12 sales of $492 psf, a 1.4% decrease from $499 psf at YE2015. Apple reported a T-12 sales figure of $5,958 psf, a 1.0% increase from $5,900 psf at YE2015. The loan continues to exhibit strong performance with a Q3 2016 debt service coverage ratio (DSCR) of 2.95 times (x), an increase from the YE2015 DSCR of 2.92x, but slightly below the YE2014 DSCR of 2.98x.

The ratings assigned to Class B, C and D materially deviate from the higher rating implied by the quantitative results. DBRS considers a material deviation to be a rating differential of three or more notches between the assigned rating and the rating implied by the quantitative results that is a substantial component of a rating methodology, in this case, the assigned ratings are a result of the sustainability of loan performance trends not demonstrated.

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 (January 2017) and CMBS North American Surveillance (December 2016), which can be found on our website under Methodologies.