DBRS Confirms Ratings of WFRBS Commercial Mortgage Trust 2013-C18

DBRS Limited (DBRS) confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2013-C18 (the Certificates) issued by WFRBS Commercial Mortgage Trust 2013-C18 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-5 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class PEX at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (sf)
-- Class F at B (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance exhibited since issuance. At issuance, the collateral consisted of 67 fixed-rate loans secured by 73 commercial properties. As of the August 2017 remittance, 66 loans remain in the pool with an aggregate principal balance of $994 million, representing a collateral reduction of 4.2% since issuance as a result of the unscheduled repayment of one loan and scheduled loan amortization. One loan, the Sullivan Center (3.9% of the pool) is secured by collateral that has been fully defeased. According to YE2016 financial reporting, the transaction had a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 2.46 times (x) and 13.0%, respectively, compared to the DBRS Term DSCR and DBRS Debt Yield of 2.05x and 11.3% at issuance, respectively.

The pool is concentrated by property type, as 15 loans, representing 40.4% of the pool, are secured by retail properties (two loans representing 29.2% of the pool are considered regional malls), ten loans (21.4% of the pool) are secured by hotel properties and four loans (18.1% of the pool) are secured by office properties. The pool is also concentrated by loan size, as the Top 10 and Top 15 loans represent 68.0% and 75.7% of the pool, respectively. Additionally, the largest three loans represent 42.3% of the pool. To date, 37 loans (73.0% of the pool) reported partial-year 2017 net cash flow (NCF) figures, while 59 loans (98.6% of the pool) reported YE2016 NCF figures. Based on the most recent cash flows available, the Top 15 loans (excluding defeasance) reported a WA DSCR of 2.53x, compared to the WA DBRS Term DSCR of 2.29x, reflective of 11.9% NCF growth over the DBRS issuance figures.

As of the August 2017 remittance, there is one loan (2.3% of the pool) in special servicing and eight loans (9.3% of the pool) on the servicer’s watchlist. The Cedar Rapids loan is secured by two Class A office properties located in Cedar Rapids, Iowa, and was transferred to special servicing in May 2017 because of delinquency and technical defaults. Three of the loans (8.4% of the pool) on the servicer’s watchlist are secured by hotel properties, while the remaining five loans (0.9% of the pool) are secured by co-op properties. All loans were flagged as a result of performance-related reasons.

At issuance, DBRS assigned an investment-grade shadow rating to two loans: Garden State Plaza (Prospectus ID#1, 15.1% of the pool) and The Outlet Collection – Jersey Gardens (Prospectus ID#3, 14.1% of the pool). DBRS confirmed that the performance of these loans remains consistent with the investment-grade loan characteristics.

DBRS has provided updated loan-level commentary [and analysis for larger and/or pivotal watchlisted loans and specially serviced loans in the transaction, as well as the Top 15 loans], in the DBRS commercial mortgage-backed securities (CMBS) IReports platform. Registration is free. To view these and future loan-level updates provided as part of DBRS’s ongoing surveillance for this transaction, please register or log into DBRS CMBS IReports at www.ireports.dbrs.com.

The ratings assigned to Classes B, C, F, and PEX 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. The deviations are warranted because of the sustainability of loan performance trends not demonstrated.

Notes:
All figures are in USD 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.

The principal methodology is CMBS North American Surveillance, which can be found on dbrs.com under Methodologies.
This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The rated entity or its related entities did participate in the rating process. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.