DBRS Confirms Ratings for All Classes of COMM 2013-CCRE11 Mortgage Trust

DBRS, Inc. (DBRS) confirmed the following classes of Commercial Mortgage Pass-Through Certificates, Series 2013-CCRE11 (the Certificates) issued by COMM 2013-CCRE11 Mortgage Trust:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at BBB (sf)
-- Class X-C at B (high) (sf)
-- Class A-M at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (high) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (sf)
-- Class F at B (sf)

All trends are Stable. DBRS previously assigned a Positive trend to Classes B and C; however, given the year-over-year cash flow declines for two of the largest ten loans in the pool from 2015 to 2016 and concerns regarding upcoming lease expiration dates for two anchor tenants at Oglethorpe Mall (Prospectus ID#5, 7.2% of the pool), DBRS changed those trends to Stable with this review.

The rating confirmations reflect the strong overall performance of the transaction since issuance. As of the August 2017 remittance, the transaction had an outstanding balance of $1.24 billion, representing collateral reduction since issuance, with all of the original 46 loans remaining in the pool. There is one defeased loan, Prospectus ID#10, The Vintage Estate, which represents 3.2% of the pool balance. At issuance, the DBRS Term debt service coverage ratio (DSCR) and DBRS Debt Yield were 1.65 times (x) and 10.0%, respectively. Based on the most recent year-end reporting for the loans in the pool, most of which are as of YE2016, the pool reported a weighted-average (WA) DSCR and Debt Yield of 1.90x and 11.3%, respectively, reflective of WA net cash flow (NCF) growth of 19.0% of the DBRS NCF figures at issuance.

The transaction also benefits from an above-average concentration of properties situated in urban and suburban markets, with each market type individually representing over 40.0% of the outstanding pool balance. In addition, the pool benefits from property type diversification, as the largest concentration of property types is in retail properties, which represent approximately 31.0% of the pool balance, and other property types including office, industrial, hospitality and self-storage properties, each representing at least 10.0% of the transaction balance. Finally, there are three loans in the top 15, representing 16.5% of the pool, that are shadow rated investment grade by DBRS.

There are challenges in the pool’s concentration by loan size, with the largest ten loans representing 64.5% of the overall pool balance. Overall, these loans are performing well, with the tenth-largest loan defeased and a WA DSCR of 2.02x and WA NCF growth over the DBRS NCF figures at issuance of 18.6% for the nine non-defeased loans in the top ten. In addition, there are seven loans, representing 31.0% of the pool, which were structured with full interest-only terms. In general, these loans have healthy to strong DBRS refinance DSCR and Exit Debt Yield metrics as based on the most recent year-end NCF figures. There are only two loans on the servicer’s watchlist as of the August 2017 remittance, with no loans in special servicing. Combined, the two loans on the watchlist represent 1.8% of the pool and only one of those loans, which represents 0.06% of the pool, is being monitored for performance issues.

DBRS has assigned investment-grade shadow ratings to three loans: Prospectus ID#3, One & Only Palmilla (7.2% of the pool), Prospectus ID#6, One Wilshire (6.4% of the pool) and Prospectus ID#11, 200-206 East 87th Street (2.8% of the pool). DBRS confirmed that the performance of these three loans remains consistent with investment-grade loan characteristics.

DBRS has provided updated loan-level commentary and analysis for the larger watchlisted loan in the transaction, as well as for 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 C, D, E and F materially deviate from the higher ratings 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 given the sustainability of performance trends not demonstrated.

Notes:
All figures are in U.S. dollars unless otherwise noted.

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.