DBRS Confirms All Classes of WFRBS Commercial Mortgage Trust 2013-C17

DBRS, Inc. (DBRS Morningstar) confirmed the ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2013-C17 (the Certificates) issued by WFRBS Commercial Mortgage Trust 2013-C17 (the Trust) as follows:

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

All trends are Stable.

The ratings confirmations reflect the stable overall performance of the pool. As of the March 2020 remittance, 75 of the original 84 loans remained in the pool with an aggregate principal balance of $644.3 million, representing a collateral reduction of 28.8% since issuance. There are 14 loans, representing 10.0% of the pool, that are fully defeased. According to the most recent reporting, the pool is reporting a weighted-average (WA) loan-to-value ratio of 55.5% and a WA debt service coverage ratio (DSCR) of 2.29x.

The pool is concentrated with loans secured by hotels, with 11 loans collectively representing 25.0% of the pool balance, including the largest loan in the pool in Hilton Sandestin Beach Resort and Spa (Prospectus ID#1, 11.6% of the pool) and another top 10 loan in the Marriott Courtyard – Goleta (Prospectus ID#6, 4.2% of the pool). Although the underlying collateral for both of those loans are generally outperforming the issuance expectations, the disruption in tourism and business travel alike amid the Coronavirus Disease (COVID-19) pandemic has caused significant and immediate impact to hotel properties in the United States and around the world. As these events continue to unfold, DBRS Morningstar is monitoring closely for developments and communicating with servicers to obtain updated information with regard to property-specific effects in cancellations and declines in bookings. As information is received, updated loan commentary will be available on the DBRS Viewpoint platform, for which information has been provided below.

As of the March 2020 remittance report, there were nine loans, representing 8.2% of the pool, on the servicer’s watchlist, and there were two loans, representing 2.3% of the pool, in special servicing. In general, none of the largest loans on the servicer’s watchlist are exhibiting significantly increased risks from issuance.

The largest loan in special servicing, Oak Hill Apartments (Prospectus ID#27, 1.4% of pool), is secured by a 108-unit multifamily property located in Washington, D.C., and it was transferred to special servicing in May 2017 because of sponsor issues. The sponsor, Sanford Capital, agreed to divest its real estate holdings in Washington, D.C. by December 2018 because of numerous housing law violations, and as of February 2020, the servicer announced the property will be foreclosed by the end of March 2020. The property reported a DSCR of -0.50x for the first nine months of 2019, compared with the YE2018 DSCR of -0.80x. Although the servicer’s most recent appraisal of $14.7 million as of August 2019 suggests value outside of the trust exposure, DBRS Morningstar believes a loss could still be likely at resolution; therefore, the analysis for this review reflects a highly stressed scenario to capture the increased risks from issuance.

The smaller loan in special servicing, Baymont Hospitality Portfolio (Prospectus ID#41, 0.9% of the pool), transferred in August 2019 for a nonpermitted equity transfer; however, recent financial performance has also declined. At this time, the servicer’s commentary suggests it has not determined a workout strategy to date. The loan is 30 days delinquent as of March 2020 reporting. The collateral is a portfolio of three limited-service hotels in Michigan. Over the life of the loan, property cash flows have declined, with the Fairfield Inn Kalamazoo, which represents 44.6% of the allocated loan balance, as the primary contributor to the low overall DSCR. The individual property reported a trailing six months ended June 2019 DSCR of 0.6x, in line with the YE2018 and YE2017 figures of 0.46x and 0.44x, respectively. The workout strategy may be in flux amid the coronavirus outbreak and its impact to the hotel industry. Therefore, DBRS Morningstar expects a resolution won’t be forthcoming in the near term. As a result, DBRS Morningstar analyzed the loan with a significantly increased probability of default.

At issuance, DBRS Morningstar shadow-rated one loan, Westfield Mission Valley (Prospectus ID#3, 8.5% of pool), as investment grade. DBRS Morningstar confirmed that the performance of this loan remains consistent with investment-grade loan characteristics.

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, X-B, 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#27 – Oak Hill Apartments (1.4% of the pool)
-- Prospectus ID#41 – Baymont Hospitality Portfolio (0.9% of the pool)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com. The platform includes loan-level 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 the 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 releases: 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 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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