DBRS Confirms WFRBS Commercial Mortgage Trust 2012-C10

DBRS Inc. (DBRS) confirmed the ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2012-C10 issued by WFRBS Commercial Mortgage Trust 2012-C10:

-- Class A-3 at AAA (sf)
-- Class A-FX at AAA (sf)
-- Class A-FL 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 X-B at A (sf)
-- Class C at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (sf)
-- Class F at B (sf)

In addition, the rating for the Class A-2 certificate has been discontinued as the class was repaid with the September 2017 remittance. All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance. As of the September 2017 remittance, the transaction had an outstanding balance of $1,305.6 million, representing a collateral reduction of 13.1% since issuance, with 76 of the original 85 loans remaining in the pool. Seven of the loans that left the pool were five-year loans repaid at maturity in 2017 and the other repaid loan was repaid ahead of the scheduled maturity date in 2022. The pool reported a weighted-average (WA) debt service coverage ratio (DSCR) of 2.0 times (x) and a WA debt yield of 12.5%, based on the most recent year-end figures reported for the underlying loans. YE2016 figures have been reported for 83.5% of the pool. Comparatively, the prior year’s reporting showed a WA DSCR and WA debt yield of 2.0x and 12.4%, respectively.

This transaction is heavily concentrated with retail properties, which comprise 47.2% of the current pool balance, with nine loans in the top 15, representing 37.4% of the current pool balance. These nine loans are backed by relatively strong performing retail properties, of which the majority are managed and/or owned by an experienced operator, and are anchored by national tenants. Furthermore, performance has generally been stronger for the retail loans in the pool as compared with the pool overall, as loans secured by retail properties reported a WA YE2016 DSCR of 2.21x.

As of the September 2017 remittance, there are ten loans on the servicer’s watchlist, representing 14.1% of the current pool balance, including two loans in the top 15, representing 8.2% of the pool balance. The largest watchlisted loan, Prospectus ID#4 – STAG REIT Portfolio (5.4% of the current pool balance), was added to the servicer’s watchlist for monitoring as the servicer works to verify all tax parcels have been paid, with documentation for all properties provided by the sponsor. All other watchlisted loans were flagged for sustained cash flow declines or tenant rollover risk. In cases of rollover, the servicer has confirmed that either a replacement tenant was identified or a renewal was executed. There are no loans in special servicing.

Classes X-A and X-B are interest-only (IO) certificates that reference a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated reference tranche adjusted upward by one notch if senior in the waterfall.

All ratings will be subject to ongoing surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed or discontinued by DBRS.

DBRS has provided updated loan-level commentary and analysis for larger and/or pivotal watchlisted loans in the transaction, as well as the Top 15 loans, in the DBRS Viewpoint 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 Viewpoint at viewpoint.dbrs.com.

The ratings assigned to Classes B, 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 loan performance trends were 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. For a list of the Structured Finance-related methodologies that may be used during the rating process, please see the DBRS Global Structured Finance Related Methodologies document on www.dbrs.com. Please note that not every related methodology listed under a principal Structured Finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

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.

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