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

DBRS Limited (DBRS) confirmed all classes of 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 (sf)
-- Class D at BBB (high) (sf)
-- Class E at BBB (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 interests in Willowbrook Mall, an enclosed, partial two-storey 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 20,000 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 2017, coupled with strong income demographics as the median household income was $70,923 within a ten-mile radius and $88,406 within a five-mile radius of the property. The loan is sponsored by General Growth Properties, Inc. (GGP), and the property is managed by an affiliate of the sponsor.

According to an October 2017 news article published by NorthJersey.com, non-collateral Sears (which originally had 290,000 sf of space) downsized and redesigned its space to approximately 95,000 sf throughout 2017. GGP entered a joint venture with a real estate holding company to purchase an ownership stake in Sears’ properties at 17 of its malls, including Willowbrook Mall. Sears remained open during the construction and made improvements to the lighting, fixtures, flooring and signage. The news article noted that customers approved of the redesigned layout as it was easier to navigate through the store. In addition, kiosks were installed throughout the store to allow customers to make online purchases to improve its e-commerce presence. Sears held its grand re-opening in October 2017. According to a February 2018 news article, also published by NorthJersey.com, 48,000 sf of the Sears space is now occupied by Dave & Buster’s, marking its second location in New Jersey as of its grand opening in February 2018. An October 2017 news article published by NJ.com reported a 12-screen Cinemark Theatres will be opening at the subject by 2019. Cinemark is expected to occupy approximately 44,000 sf and will be located where the former Sears Auto Center was located. It should be noted that a 14-screen AMC is already located less than a mile east of the subject property. DBRS reached out to the servicer regarding potential tenants that may be interested in backfilling the remaining Sears space, and a response is currently pending as of the date of this press release. With the addition of Dave & Buster’s and GGP’s continuous effort to bring in new tenants to the subject, DBRS does not anticipate performance to decline because of the downsizing of Sears.

The property is well occupied with a collateral occupancy of 94.2% per the September 2017 rent roll. The largest tenant, Zara, expanded its footprint at its lease renewal in May 2017 to 5.1% of the net rentable area (from 1.5% of the NRA) with the lease expiring in July 2027. The second largest tenant, Old Navy, reduced its footprint at the subject to 1.5% of the NRA (from 5.0% of the NRA) upon its ten-year lease renewal in July 2017. Tenants representing 12.0% of the NRA have leases that recently expired or will be expiring in 2018. Of those tenants, DBRS notes that shops representing 6.3% of NRA with 2017 or February 2018 lease expirations were still listed in the mall’s directory.

The tenant sales report for the trailing 12-month (T-12) period ended September 2017 showed overall strong in-line sales performance for the property, compared with the YE2016 figures. According to that report, tenants occupying less than 10,000 sf reported T-12 sales of $827 per square foot (psf), an 8.4% increase from YE2016 sales of $763 psf. Tenants occupying more than 10,000 sf reported T-12 sales of $541 psf, a 0.8% decrease from YE2016 sales of $510 psf. Apple reported a T-12 sales figure of $6,527 psf, a 3.3% increase from YE2016 sales of $6,316 psf. The loan continues to exhibit strong performance with a Q3 2017 debt-service coverage ratio (DSCR) of 3.22 times (x), compared with the YE2016 DSCR of 3.28x, YE2015 DSCR of 3.09x and DBRS Term DSCR at issuance of 2.53x.

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.

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 under Related Documents or by contacting us at info@dbrs.com.

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 for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

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