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 since the last review. The transaction consists of a $360.0 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 collateral continues to be well occupied with stable sales figures, even though the mall underwent a transition phase in 2017 as $20.0 million of improvements were conducted and the non-collateral Sears downsized from 290,000 square feet (sf) to 95,000 sf. The collateral fee interest consists of 492,649 sf of major tenant and in-line space, while the leasehold interest consists of 28,275 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 12-year loan benefits from its experienced sponsor in Brookfield Properties, which manages over 296 million sf in commercial space globally.

Due to Sears’ recent financial struggles, the department store opted to downsize and retrofit the subject location in 2017, which effectively vacated 195,000 sf of its suite and occupies only 95,000 sf as of September 2018. Dave & Buster’s has since subletted a 48,000-sf portion of the Sears vacated space, which opened for business in February 2018. In addition to the Sears vacancy, the Sears Auto Center has been razed and a 12-screen Cinemark movie theater, which is expected to open at the end of summer 2019, is currently under construction on the parcel. Finally, the servicer’s January 2018 site inspection report noted the sponsor had taken control of 100,000 sf of the Sears space and 20,000 sf of the Bloomingdale’s suite with plans for redevelopment. The Bloomingdale’s space is currently being renovated to accommodate two new restaurant tenants. It is unclear whether the sponsor had acquired or subleased these sites as the anchor parcels were tenant-owned at issuance; however, DBRS is obtaining more information regarding the status.

The collateral’s occupancy remains stable with an occupancy rate of 94.8% per the September 2018 rent roll, slightly greater than the September 2017 occupancy rate of 94.2%. The largest collateral tenants are Zara (5.1% of the net rentable area (NRA); lease expires July 2027), Old Navy (4.0% of the NRA; lease expires July 2027) and Gap (3.9% of the NRA; lease expires September 2024). Tenants representing 12.9% of NRA have leases that expired prior to year-end (YE) 2018 or will be expiring in 2019. Of those tenants, DBRS notes certain tenants, representing 8.2% of the NRA, had January 2019 lease expirations; however, the mall’s directory continues to list these tenants as open for business as of February 2019, indicating the tenants have renewed.

The tenant sales report for the trailing 12-month (T-12) period ending September 2018 showed overall strong in-line sales performance for the property. Tenants occupying less than 10,000 sf reported T-12 sales of $874 per square foot (psf), a 5.8% increase from YE2017 sales of $826 psf. The loan continues to exhibit strong performance with a T-9 ending September 2018 debt service coverage ratio (DSCR) of 3.26 times (x), compared with the YE2017 DSCR of 3.16x, YE2016 DSCR of 3.28x and DBRS Term DSCR derived issuance of 2.53x. Cash flow growth since issuance is attributed to high occupancy rates with increasing base rents.

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

DBRS provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for this transaction.

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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 www.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, which can be found on www.dbrs.com in the Commentary tab under Regulatory Affairs. 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. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The DBRS long-term rating scale definition indicates that ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

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

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