DBRS Upgrades Two Classes and Confirms Four Classes of Asset-Back Notes Issued by Selkirk 2013-1

DBRS Limited (DBRS) upgraded the ratings on the following classes of Asset-Back Notes issued by Selkirk 2013-1 (the Trust) as follows:

-- Class D to A (high) (sf) from A (low) (sf)
-- Class E to BBB (sf) from BB (high) (sf)

DBRS also confirmed the ratings of the following classes:

-- Class A2 at AAA (sf)
-- Class B at AAA (sf)
-- Class C at AA (sf)
-- Class F at BB (low) (sf)

All trends are Stable.

The rating upgrades reflect the increased credit support to the bonds as a result of scheduled loan amortization, successful loan repayment and the overall stable performance of the remaining collateral in the pool. As of the November 2018 remittance, there has been a collateral reduction of 65.1% since issuance and 10.5% in the last 12 months, as seven loans have repaid from the Trust over the past year, contributing $96.4 million in principal reduction to the senior bonds. Of the original 55-loan pool, 25 loans remain with an aggregate outstanding principal balance of $321.2 million.

Thirteen of the top 15 loans that are reporting YE2017 financials continue to exhibit stable performance with a weighted-average (WA) debt service coverage ratio (DSCR) and debt yield of 1.61 times (x) and 12.2%, respectively. These loans have experienced a WA net cash flow growth of 13.8% over the DBRS issuance figures. As of the November 2018 remittance, there are no loans in special servicing and one loan on the servicer’s watchlist, representing 4.0% of the current pool balance. The 830 Morris Turnpike loan (Prospectus ID#24) is being monitored for performance decline as the YE2017 DSCR was 0.60x as the former largest tenant at the subject vacated at lease expiration in October 2016. The borrower has successfully leased a portion of the vacant space, bringing the occupancy rate to 69.9% as of March 2018, compared with 63.0% at March 2017. DBRS accounted for the elevated vacancy and analyzed the loan with a stressed cash flow scenario.

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

As part of this review, DBRS has provided updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Prospectus ID#4 – 777 Long Ridge Road – Long Ridge Office Park (12.0% of pool)
-- Prospectus ID#24 – 830 Morris Turnpike (4.0% of pool)

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

The principal methodology is North American CMBS Surveillance Methodology, which can be found on dbrs.com under Methodologies & Criteria. 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.

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.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

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