DBRS Morningstar Confirms All Classes of WFRBS Commercial Mortgage Trust 2013-C17, Stable Trends

DBRS Limited (DBRS Morningstar) confirmed the ratings of the Commercial Mortgage Pass-Through Certificates, Series 2013-C17 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 B at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-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.

According to the March 2021 remittance, 74 of the original 84 loans remain in the pool, representing a collateral reduction of 31.0% since issuance. In addition, there are 18 loans, representing 13.1% of the pool, that are fully defeased. Four loans, representing 7.3% of the pool, are in special servicing while 19 loans, representing 35.2% of the pool, are on the servicer’s watchlist. The watchlisted loans are being monitored primarily for low debt service coverage ratios (DSCRs) and occupancy related issues. The pool is fairly concentrated by property type with 32.1% of the pool secured by retail properties and 25.1% of the pool secured by lodging properties.

In general, the performance for the lodging properties backing loans in the trust had been quite healthy prior to 2020; however, the disruptions in tourism and business travel alike amid the Coronavirus Disease (COVID-19) pandemic have had a significant and immediate impact on hotel properties in the United States and around the world. The largest loan in special servicing, Marriott Courtyard - Goleta (Prospectus ID#6, 4.2% of the pool) is secured by a 115-room limited-service hotel property in Goleta, California. The loan transferred to special servicing in August 2020 due to imminent monetary default. The special servicer is working with the sponsor to finalize the terms of a forbearance agreement and the loan is expected to return to the master within the near term. As of the trailing 12 months ended September 2020, the servicer reported a DSCR of 0.83 times (x), down from the year-end (YE) 2019 DSCR of 2.14x and the YE2018 DSCR of 2.10x. The loan has remained current throughout the transfer to special servicing, outside of one late but less than 30 days delinquent payment shown in January 2021. The loan reported current for March 2021. Given the uncertainty surrounding the final terms of the loan modification and the prospects for a return to historical performance, DBRS Morningstar applied a probability of default penalty in the analysis of this loan to increase the expected loss for this review.

The second-largest loan in special servicing, Oak Hill Apartments (Prospectus ID#27, 1.4% of pool), has been in special servicing since May 2017 and is secured by a 108-unit multifamily property located in Washington, D.C. The sponsor, Sanford Capital, agreed to divest its real estate holdings in Washington, D.C. because of numerous housing law violations. As of this review the property remains in receivership with an anticipated foreclosure date in 2021. Based on the most recent appraisal dated April 2020, the property was valued at $10.9 million, which is a decrease from the issuance value of $14.2 million. DBRS Morningstar assumed a liquidation scenario for this loan based on the most recent valuation, which an implied loss severity in excess of 80.0%, all of which would be contained to the unrated Class G certificate.

The largest loan in the pool and on the servicer’s watchlist is Hilton Sandestin Beach Resort and Spa (Prospectus ID#1, 11.6% of the pool), which is secured by a 598-key full-service Hilton hotel located in Destin, Florida. The loan was added to the servicer’s watchlist in September 2020 for a low DSCR, a direct result of the coronavirus pandemic. Performance prior to 2020 was quite strong, with a YE2019 DSCR of 4.36x. The sponsor has not submitted a coronavirus relief request to date and the loan has remained current through the period of significant decline in performance for the collateral hotel. Given the historically stable performance and high coverage ratio, DBRS Morningstar believes the increased risks from issuance for this loan are relatively moderate.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

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 issuance metrics and all historical surveillance commentary on the DBRS Viewpoint platform.

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 [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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