DBRS Confirms All Classes of COMM 2013-CCRE6 Mortgage Trust

DBRS, Inc. (DBRS) confirmed the ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2013-CCRE6 issued by COMM 2013-CCRE6 Mortgage Trust:

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

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since the last review in January 2018, when Classes D and E were upgraded by one notch each. As of the November 2018 remittance, 41 of the transaction’s original 48 loans remain in the pool, with a trust balance of $1,062 million, representing a 24.1% collateral reduction since issuance. The pool benefits from overall healthy net cash flow (NCF) growth from issuance, as well as a concentration of loans secured by properties in urban and super-dense urban locations, which represent 31.2% of the pool balance. There have also been four loans, representing 2.0% of the pool balance, that have been fully defeased. There have been no losses to date, but DBRS does expect a loss with the resolution of the only loan currently in special servicing, La Quinta Inn & Suites Canton (Prospectus ID#46; 0.3% of the pool), and has incorporated that into the analysis for this review.

As of November 2018, 34 loans, representing 96.6% of the pool balance, reported YE2017 financials and 34 loans, representing 84.2% of the pool balance, reported partial-year 2018 financials. The pool reports a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 2.23 times (x) and 12.1%, respectively, per the most recent year-end financials. The WA NCF increased 8.0% over the DBRS NCF derived at issuance for the overall pool, with NCF growth of 12.1% for the largest 15 loans (62.8% of the pool).

The La Quinta Inn & Suites Canton loan is secured by a 98-key hotel property located in Canton, Ohio, that transferred to the special servicer in February 2018 due to maturity default. The hotel’s performance was adversely affected by the oil market downturn over the previous three years. A March 2018 appraisal estimated the property’s as-is value at $3.9 million, down from $8.8 million at issuance. Based on the March 2018 value, DBRS estimates that a loss severity in excess of 20.0% will be incurred at resolution.

Additionally, there are four loans, representing 23.3% of the pool balance, on the servicer’s watchlist. The two largest loans, Federal Center Plaza (Prospectus ID#1; 8.7% of the pool) and The Avenues (Prospectus ID#3; 7.4% of the pool), are on the watchlist for increased tenancy risk. The Federal Center Plaza borrower is in renewal negotiations with the rolling tenant for a short renewal term. As the tenant in question is currently paying well below market rental rates, DBRS believes there is upside potential should the tenant eventually move out of the space. The Avenues is anchored by a collateral Sears, which filed for Chapter 11 bankruptcy in October 2018. This location is not on any of the company’s published closure lists, but given the well-publicized struggles of the retailer, the situation will be monitored closely for developments. DBRS believes the risk is mitigated by the loan’s strong credit metrics (the loan reported a 3.92x DSCR as at YE2017) and experienced sponsorship in Simon Property Group, Inc.

At issuance, DBRS shadow-rated the Federal Center Plaza loan investment grade, based on the collateral property’s desirable location, significant tenant investment, below-market rents and added value of the property’s redevelopment parcel. With this review, DBRS confirms that the performance of that loan remains consistent with investment-grade loan characteristics.

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 applicable reference obligation 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.

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#1 – Federal Center Plaza (12.3% of the pool balance)
• Prospectus ID#3 – The Avenues (10.4% of the pool balance)
• Prospectus ID#14 – 70 West 45th Street (3.1% of the pool balance)
• Prospectus ID#16 – Springfield Residence Inn (2.3% of the pool balance)
• Prospectus ID#36 – Pointe Flamingo (0.6% of the pool balance)
• Prospectus ID#46 – La Quinta Inn & Suites Canton (0.3% of the pool balance)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrs.com. The platform includes issuer and servicer data for the entire commercial mortgage-backed securities universe, as well as deal and loan-level commentary for all DBRS-rated transactions.

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

The principal methodology is the 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 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.

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