DBRS Morningstar Confirms All Ratings on BANK 2018-BNK13, Removes Four Classes from Under Review with Negative Implications

DBRS Limited (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass-Through Certificates, Series 2018-BNK13 issued by BANK 2018-BNK13 as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-5 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (sf)
-- Class X-B at A (sf)
-- Class C at A (low) (sf)
-- Class X-D at BBB (sf)
-- Class D at BBB (low) (sf)
--Class X-E at BB (sf)
-- Class E at BB (low) (sf)
-- Class X-F at B (sf)
-- Class F at B (low) (sf)

In addition, Classes E, F, X-E, and X-F were removed from Under Review with Negative Implications, where they were placed on August 6, 2020. All trends are Stable.

The rating confirmations reflect the overall stable performance of the underlying loans in the transaction. At issuance, the trust consisted of 62 fixed-rate loans secured by 80 commercial, hospitality, and multifamily properties with an original balance of $944.2 million. As of the December 2020 remittance report, all of the original loans remain in the pool and there has been a nominal collateral reduction of 3.4% since issuance. Amortization has generally been limited as 23 of the loans representing 66.3% of the current pool balance are structured as interest-only (IO) and seven loans representing another 7.7% are structured as partial-IO and remain in their IO periods. Of note, nearly all of the amortization to date is attributable to the Pfizer Building loan, which is amortizing on an atypical 75-month schedule. The collateral pool is concentrated by property type with the highest property type concentration by loan balance consisting of office assets (13 properties accounting for 36.4% of the current pool balance). Retail assets account for the second greatest property type concentration, with 24 properties that represent 35.4% of the current pool balance. There are six loans secured by lodging properties, which have been particularly hard-hit by the global Coronavirus Disease (COVID-19) pandemic; however, the concentration is relatively small as these loans make up only 10.3% of the current pool balance.

At issuance, DBRS Morningstar assigned an investment-grade shadow rating to four loans: Prospectus ID#1 – 1745 Broadway (10.3% of current pool); Prospectus ID#3 – Pfizer Building (4.6% of current pool); Prospectus ID#12 – Fair Oaks Mall (3.6% of current pool); and Prospectus ID#14 – 181 Fremont (2.4% of current pool). With this review, DBRS Morningstar confirmed that the respective performance of each of these loans remains consistent with the characteristics of an investment-grade loan.

As of the December 2020 remittance period, there were three loans with the special servicer representing 8.1% of the current pool balance. One of the specially serviced loans, Shoppes at Chino Hills (Prospectus ID#15, 2.4% of the current pool), has been modified and is expected to return to the master servicer in the near term. The largest specially serviced loan is the Florida Hotel & Conference Center loan (Prospectus ID#10, 4.4% of current pool). The loan, secured by a 511-key, full-service hotel in Orlando, transferred to the special servicer in October 2020 for coronavirus-related relief after a prior relief request was denied in April 2020. Performance prior to the pandemic was generally in line with expectations and a temporary forbearance appears to be the likely outcome. A new appraisal was reported in December 2020 that valued the property at $54.9 million, comfortably in excess of the current loan balance.

The Courtyard – Myrtle Beach loan (Prospectus ID#22, 1.3% of current pool) also transferred after a coronavirus-related relief request and the servicer is dual-tracking a workout with foreclosure. Despite performance trending downward through YE2019, a post-transfer appraisal still valued the property in excess of the loan balance.

There are 15 loans representing 5.6% of the current pool balance on the servicer’s watchlist; however, 10 of these loans are secured by co-operative properties that historically have very low default rates. Among the remaining watchlisted loans, none exceed a current balance of $6.0 million and all are generally being monitored for minor performance declines or for deferred maintenance.

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, X-D, X-E, and X-F are 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 this transaction.

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 North American CMBS Surveillance Methodology (March 6, 2020), which can be found at dbrsmorningstar.com/about/methodologies. 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.

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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