DBRS Morningstar Confirms All Ratings of JP Morgan Chase Commercial Mortgage Securities Trust 2013-C16, Removes Three Classes From Under Review with Negative Implications
CMBSDBRS Limited (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass-Through Certificates, Series 2013-C16, issued by JP Morgan Chase Commercial Mortgage Securities Trust 2013-C16 as follows:
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class EC at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (sf)
-- Class X-C at B (high) (sf)
-- Class F at B (sf)
All trends are Stable.
Classes E, X-C, and F were removed from Under Review with Negative Implications where they were placed on August 6, 2020. The rating confirmations reflect the overall stable performance of the transaction since issuance. At issuance, the transaction consisted of 60 fixed-rate loans secured by 113 commercial and multifamily properties with a trust balance of $1.1 billion. According to the November 2020 remittance, 51 of the original 60 loans remain in the pool, representing a collateral reduction of 28.8% since issuance. The transaction is concentrated by property type as nine loans, representing 31.9% of the current trust balance, are secured by office properties while the second-largest concentration comprises seven loans, representing 24.1% of the current trust balance, are secured by multifamily collateral. The transaction benefits from its low exposure to both retail and lodging properties, comprising just 15.1% and 8.2% of the pool, respectively, and its significant amount of defeased loans totaling 17.7% of the current pool. There are three loans, representing 7.7% of the pool, in special servicing and 12 loans, representing 35.0% of the pool on the servicer’s watchlist including the largest loan in the pool, The Aire (Prospectus ID#1, 15.4% of pool). These loans are being monitored for various reasons, including low debt service coverage ratios (DSCR) or occupancy, tenant rollover risk, and/or Coronavirus Disease (COVID-19) pandemic-related forbearance requests.
The largest loan in special servicing, Hilton Richmond Hotel & Spa (Prospectus ID#7, 4.9% of the pool), secured by a 254-room full-service hotel in Richmond, Virginia, transferred to the special servicer in April 2020 for imminent monetary default shortly after the borrower notified the master servicer of an anticipated drop in performance as a result of the coronavirus pandemic. The property has historically benefited from its proximity to several major corporate headquarters and its 21,700 sf of meeting space but has been severely negatively affected by the pandemic. The loan is over 121 days delinquent as of November 2020 and the special servicer’s current course of action is to dual track foreclosure or a loan modification with the borrower. An updated appraisal has been ordered and is currently in process. Given the risks surrounding the collateral property, this loan was analyzed with an elevated probability of default for this review.
The Aire, secured by a luxury apartment on the Upper West Side of Manhattan, has been monitored on the servicer’s watchlist since February 2017 because of a DSCR below 1.0 times (x). The property has seen its real estate taxes steadily increase as a 10-year tax abatement is gradually expiring resulting in the taxes increasing 20% every two years since 2014. This tax increase, in conjunction with increases in other expense items such as repairs and maintenance and payroll, has contributed to the loan’s poor performance. Revenue has increased 12% since issuance and the property most recently reported an occupancy rate of 96% as of May 2020. Although the DSCR has remained below 1.0x since 2017, the sponsor has kept the loan current with no missed payments reported to-date. Because of the consistent performance struggles, DBRS Morningstar analyzed this loan with an increased probability of default for this review.
ESG CONSIDERATIONS
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 loan in the transaction:
-- Prospectus ID#7 – Hilton Richmond Hotel & Spa (4.9% of the pool)
For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com The platform includes 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 (March 6, 2020), 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.
For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.
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.
DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577
Ratings
ALL MORNINGSTAR DBRS RATINGS ARE SUBJECT TO DISCLAIMERS AND CERTAIN LIMITATIONS. PLEASE READ THESE DISCLAIMERS AND LIMITATIONS AND ADDITIONAL INFORMATION REGARDING MORNINGSTAR DBRS RATINGS, INCLUDING DEFINITIONS, POLICIES, RATING SCALES AND METHODOLOGIES.