DBRS Morningstar Confirms All Ratings on COMM 2013-CCRE8 Mortgage Trust

DBRS Limited (DBRS Morningstar) confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2013-CCRE8 issued by COMM 2013-CCRE8 Mortgage Trust (the Issuer) as follows:

-- Class A-4 at AAA (sf)
-- Class A-5 at AAA (sf)
-- Class A-SBFL at AAA (sf)
-- Class A-SBFX at AAA (sf)
-- Class A-M at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AA (high) (sf)
-- Class B at AA (sf)
-- Class C at AA (low) (sf)
-- Class D at BBB (high) (sf)
-- Class E at BB (high) (sf)
-- Class X-C at BB (low) (sf)
-- Class F at B (high) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance, when the transaction consisted of 59 loans and an original trust balance of $1.4 billion. As of the February 2020 remittance, 51 loans remained in the trust with a balance of $1.0 billion, representing a collateral reduction of 26.0% caused by loan repayments, scheduled loan amortization, realized losses, and recovered proceeds from loans liquidated from the pool. The pool benefits from 13 loans, representing 20.2% of the pool, that have fully defeased.

Based on the most recent year-end reporting available, loans representing 79.8% of the current pool balance reported a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 2.02 times (x) and 11.1%, respectively. In addition, loans representing 73.4% of the pool reported partial-year 2019 financials with a WA DSCR and WA debt yield of 1.60x and 9.7%, respectively.

As of the February 2020 remittance report, two loans, representing 1.7% of the pool, were on the servicer’s watchlist, including 11000 Equity Drive (Prospectus ID#28; 1.0% of the pool), which is secured by a 63,693 square foot (sf) office property in Houston. The loan is being monitored for its low DSCR, which was reported at 0.84x for the trailing 12-month period ended December 2019. According to the servicer, the loan’s performance has remained depressed since YE2016 following the departure of the largest tenant at the time, Superior Energy Services, Inc. (53.0% of net rentable area (NRA)), which vacated in June 2015. In addition, Satterfield & Pontikes Construction (41.0% of NRA), vacated the subject upon its lease expiration in November 2018. However, according to the servicer, the borrower executed a lease with Exterran Energy Solutions, L.P. (92.0% of NRA) that commenced in Q2 2019. For additional information on this loan, please see the loan commentary in the DBRS Viewpoint platform.

The smaller loan on the servicer’s watchlist, 12808 West Airport (Prospectus#38; 0.7% of the pool), is secured by a 155,243 sf suburban office in Sugar Land, Texas. The loan is being monitored as the largest tenant, ABB, Inc. (39.0% of NRA), had a lease expiration in December 2019. According to the servicer, the tenant downsized and renewed its lease at the subject, although details on the lease terms are pending.

DBRS Morningstar notes that the decline in tourist and business travel related to the 2020 Coronavirus Disease (COVID-19) outbreak will affect the pool’s hotel concentration, particularly the third-largest loan, Westin San Diego (Prospectus ID#4; 6.0% of the pool), and another loan in the top 15, Hotel Oceana Santa Barbara rebranded as Hotel Milo Santa Barbara (Prospectus ID#16; 2.2% of the pool). The San Diego property has consistently outperformed issuance expectations, but the Santa Barbara property has consistently reported coverage ratios below the Issuer’s figure, suggesting that property may be more vulnerable amid the significant disruption to the hospitality industry that will likely extend into the medium to long term. DBRS Morningstar contacted the servicer regarding impacts on both properties and will provide updated information on the DBRS Viewpoint platform once available.

At issuance, DBRS Morningstar shadow-rated the largest loan in the pool, 375 Park Avenue (Prospectus ID#1; 20.4% of the pool). With this review, DBRS Morningstar confirms 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#1 – 375 Park Avenue (20.4% of the pool)
-- Prospectus ID#28 – 11000 Equity Drive (1.0% 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 [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.dbrsmorningstar.com or contact us at [email protected].

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