DBRS Morningstar Confirms All Classes of Citigroup Commercial Mortgage Trust 2013-GC15

DBRS Limited (DBRS Morningstar) confirmed the ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2013-GC15 issued by Citigroup Commercial Mortgage Trust 2013-GC15 as follows:

-- Class A-3 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 X-C at BB (high) (sf)
-- Class B at AA (high) (sf)
-- Class C at A (sf)
-- Class PEZ at A (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (sf)
-- Class F at B (high) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction, which has had a collateral reduction of 29.6% since issuance with 74 of the original 92 loans remaining in the pool as of the February 2020 remittance report. Seven loans, including one loan in the top 15, are fully defeased, representing 5.8% of the pool.

Loans representing 67.9% and 92.9% of the current pool balance reported partial-year 2019 and YE2018 financials, respectively. Collectively, the loans reporting YE2018 financials have a weighted-average (WA) debt service coverage ratio (DSCR) and debt yield of 1.59 times (x) and 11.3%, respectively. The largest 15 loans reported YE2018 financials with a WA DSCR and debt yield of 1.56x and 10.9%, respectively, representing a WA cash flow improvement of 11.5% over the DBRS Morningstar net cash flow figures derived at issuance. The pool is highly concentrated with retail property types with 33 loans, representing 33.6% of the pool, secured by retail properties, including six retail loans in the top 15. This concentration is particularly noteworthy amid the ongoing 2020 Coronavirus Disease (COVID-19) outbreak and its impact on retail traffic nationwide as cities, governors, and company Chief Executive Officers have taken measures to address the coronavirus spread by closing stores and restaurants. In general, the loans secured by retail properties in the subject pool are performing as expected, but DBRS Morningstar will continue to monitor as developments amid the coronavirus unfold.

As of the February 2020 remittance, one loan, representing 4.3% of the pool, was in special servicing and 12 loans, representing 20.8% of the pool, were on the servicer’s watchlist. The largest loan on the watchlist, 125 Third Avenue (Prospectus ID#2; 7.2% of the pool), is being monitored for exterior damage incurred by neighbouring construction and has maintained its strong performance since issuance.

The loan in special servicing, 735 Sixth Avenue (Prospectus ID #6; 4.3% of the pool), is secured by the ground- and mezzanine-floor retail portion of a 40-story multifamily building in New York’s Chelsea neighbourhood. At issuance and in most years since, the collateral was fully occupied, but two major departures in the last year have reversed those trends. David’s Bridal (65.5% of the net rentable area (NRA)) and T-Mobile (15.2% of the NRA) vacated at lease expirations in late 2018. With these departures, the property’s physical occupancy rate is approximately 18.8%.

Because of the building’s restrictions on restaurant tenants, the property has had issues backfilling the space, regardless of its central location in Manhattan. The loan transferred to special servicing in February 2019 for delinquency with a March 2019 appraisal as-is value of $27.0 million, a 40.7% discount to the June 2013 appraisal value of $45.5 million and below the trust exposure of approximately $38.5 million as of February 2020. Based on the most recent appraisal, DBRS Morningstar expects the loss severity at resolution to approach 60.0%.

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-C 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#6 – 735 Sixth Avenue (4.3% 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 [email protected].

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.dbrs.com or contact us at [email protected].

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