DBRS Upgrades Three Classes and Confirms 11 of WFRBS Commercial Mortgage Trust 2013-C17

DBRS Limited (DBRS) upgraded the Commercial Mortgage Pass-Through Certificates, Series 2013-C17, issued by WFRBS Commercial Mortgage Trust 2013-C17 as follows:

-- Class X-B to AAA (sf) from AA (high) (sf)
-- Class B to AA (high) (sf) from AA (sf)
-- Class C to A (high) (sf) from A (sf)

Additionally, DBRS confirmed the following 11 classes:

-- 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-S at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class X-A at AAA (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (sf)
-- Class X-C at B (high) (sf)
-- Class F at B (sf)

All trends are Stable.

The rating upgrades reflect the continued strong performance of the transaction exhibited since issuance. As of the October 2017 remittance, all 84 loans remained in the pool with an aggregate principal balance of $865.2 million, representing a collateral reduction of 4.3% since issuance as a result of scheduled loan amoritization. Six loans are secured by defeasance collateral, representing 14.4% of the pool balance. Excluding the defeased loans, the pool reported a weighted-average (WA) debt service coverage ratio (DSCR) of 2.21 times (x) and a WA debt yield of 14.1%, based on YE2016 financials. Comparatively, the YE2015 report reflects a WADSCR of 2.08x and WA debt yield of 13.1%. The top 15, excluding the three defeased loans, had a WADSCR and debt yield of 2.55x and 14.5%, respectively, exhibiting WA net cash flow (NCF) growth of 3.3% over the YE2015 figures and NCF growth of 22.9% over the DBRS NCF figures at issuance.

There are four loans, representing 10.9% of the pool, scheduled to mature in the next 12 months. Two of these loans, representing 8.3% of the pool, are fully defeased. The two remaining maturing loans reported strong credit metrics. The larger of the two loans, Prospectus ID#10, Crowne Tundra Hotel Portfolio (2.5% of the pool balance), reported a DBRS Refi DSCR of 2.38x and an exit debt yield of 20.1%. The remaining loan, Prospectus ID#74 (0.2% of the pool balance), reported a DBRS Refi DSCR and an exit debt yield of 2.11x and 15.2%, respectively.

As of the October 2017 remittance, there are two loans, representing 1.9% of the pool balance, in special servicing. The larger loan of the two, Prospectus ID#27, Oak Hill Apartments (1.1% of the pool balance), was transferred to the special servicer in May 2017. The collateral was recently appraised in July 2017, and the loan maintains a stable loan-to-value (LTV) of 70.0% compared with its LTV at issuance of 69.7%. The second loan in special servicing, Prospectus ID#35, Hampton Inn Detroit-Novi (0.9% of the pool balance), was transferred to the special servicer in July 2017 when counsel issued a letter of technical default as the sponsor constructed another property on a portion of the collateral’s parcel. The property continues to perform well with a YE2016 DSCR of 2.76x, and as of the July 2017 Smith Travel Accommodations Report (STAR), the property had a trailing 12-month occupancy rate and revenue per available room (RevPAR) of 78.0% and $95.70, respectively, outperforming its competitive set, which reported an occupancy rate and RevPAR, for the same period, of 69.9% and $81.21, respectively. DBRS does not expect the performance of the loan to materially change in the near term and continues to track the resolution of the technical default.

Additionally, there are seven loans, representing 6.0% of the pool, on the servicer’s watchlist. The majority of these loans are performing well with a WADSCR and debt yield of 2.01x and 11.8%, respectively. Two loans on the servicer’s watchlist have a YE2016 DSCR’s below 1.0x, with one loan, Prospectus ID#26, Staybridge Suites -- Minot (1.1% of the pool balance), experiencing performance declines attributable to the downturn in the North Dakota oil and gas industry. The other loan, Prospectus ID#41, Baymont Hospitality Portfolio (0.7% of the pool balance), experienced performance declines due to ongoing infrastructure updates by the Michigan Department of Transportation, which has the visibility and accessibility of the subject; therefore, it negatively impacts occupancy and nightly rates.

At issuance, DBRS shadow-rated one loan, Westfield Mission Valley (Prospectus ID#3, representing 6.4% of the current pool balance), as investment grade. DBRS confirmed that the performance of this loan remains consistent with investment-grade loan characteristics.

Classes X-A, X-B and X-C 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 provided an 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 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.

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.

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.

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