DBRS Morningstar Upgrades Seven Classes of Morgan Stanley Bank of America Merrill Lynch Trust 2013-C9

DBRS Limited (DBRS Morningstar) upgraded the ratings of the following classes of Commercial Mortgage Pass-Through Certificates, Series 2013-C9 issued by Morgan Stanley Bank of America Merrill Lynch Trust 2013-C9 as follows:

-- Class B upgraded to AA (high) (sf) from AA (sf)
-- Class X-B upgraded to AA (high) (sf) from AA (sf)
-- Class C upgraded to AA (sf) from AA (low) (sf)
-- Class PST upgraded to AA (sf) from AA (low) (sf)
-- Class F upgraded to BBB (sf) from BBB (low) (sf)
-- Class G upgraded to BB (high) (sf) from BB (sf)
-- Class H upgraded to B (high) (sf) from B (sf)

DBRS Morningstar also confirmed the ratings of the following classes:

-- Class A-3 at AAA (sf)
-- Class A-3FL at AAA (sf)
-- Class A-3FX at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-AB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class D at A (low) (sf)
-- Class E at BBB (high) (sf)

All trends are Stable.

The rating upgrades and confirmations reflect the generally healthy performance of the transaction since issuance. At closing, this transaction consisted of 60 loans secured by 77 properties for a total trust balance of approximately $1.28 billion. As of the February 2020 remittance report, the trust balance was $958.5 million, representing a collateral reduction of 24.9% resulting from scheduled amortization and loan repayments, with 51 of the original 60 loans remaining in the pool. The pool also has six fully defeased loans representing 25.8% of the pool, four of which are in the top 15 loans.

Loans representing 66.3% and 79.5% of the current pool balance reported partial-year 2019 and YE2018 (year-end) financials, respectively. Collectively, the loans reporting YE2018 financials have a weighted-average (WA) debt service coverage ratio (DSCR) and debt yield of 1.87 times (x) and 10.9%, respectively. Those figures compared with the year-end 2017 financials which reported a WA DSCR and debt yield of 1.74x and 10.1%, respectively, show healthy year-over-year growth. Of the loans reporting YE2018 financials in the top 15, which collectively represent 72.7% of the pool balance, those loans had a WA net cash flow growth of 9.6% over the YE2017 figures, with a WA DSCR of 1.87x.

In addition to the stable in-place coverage ratios and healthy cash flow growth for the underlying loans, the pool also benefits from the low expected loss for many of the largest loans in the pool, including the top loan in Milford Plaza Fee, which represents 17.1% of the current pool balance. The loan is secured by the ground-leased fee interest under a hotel condominium of New York City’s Milford Plaza Hotel, is considered a very low risk loan given the strength of the collateral and loan structure.

As of the February 2020 remittance report, there are six loans representing 10.5% of the pool on the servicer’s watchlist, with no loans in special servicing. The largest loan on the watchlist, Prospectus ID #5–Apthorp Retail Condominium, representing 6.1% of the current pool, is being monitored on the watchlist for a low DSCR. Given the increased risks from issuance, DBRS Morningstar significantly increased the probability of default for the loan as part of this review. For additional information on that loan and the DBRS Morningstar perspective on current and future performance, please see the loan commentary on the DBRS Viewpoint platform, for which information is provided below.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

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

DBRS Morningstar provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Prospectus ID#4–Dartmouth Mall (6.1% of the pool)
-- Prospectus ID#5–Apthorp Retail Condominium (6.0% of the pool)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com. The platform includes issuer and servicer data for most outstanding CMBS transactions (including non-DBRS Morningstar rated), as well as loan-level and transaction-level commentary for most DBRS Morningstar-rated and -monitored transactions.

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 dbrsmorningstar.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 Morningstar Global Structured Finance Related Methodologies document, which can be found on dbrsmorningstar.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.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

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@dbrsmorningstar.com.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar 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 Morningstar 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.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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