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

DBRS, Inc. (DBRS Morningstar) confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2013-CCRE8 issued by COMM 2013-CCRE8 Mortgage Trust 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 with an original trust balance of $1.4 billion. As of the March 2021 remittance, 51 loans remained in the trust with a balance of $1.0 billion, representing a collateral reduction of 27.5% resulting from loan repayments, scheduled loan amortization, and two liquidated loans. The pool benefits from 15 loans, representing 22.3% of the pool, that have fully defeased.

Four loans, representing 7.6% of the pool, are in special servicing. The largest loan in special servicing is El Paseo South Gate (Prospectus ID#10; 3.9% of the pool), which is secured by the fee interest in a 298,696-square-foot (sf) anchored retail center in South Gate, California, approximately 11 miles from downtown Los Angeles. The loan transferred to special servicing in February 2021 after the borrower requested relief because of the Coronavirus Disease (COVID-19) pandemic. The property has been severely affected by the pandemic, as two of the property’s three largest tenants have been closed for most of the pandemic. The largest tenant, Regal Entertainment (Regal; 36.3% of net rentable area (NRA)), has remained closed since the pandemic started (although Regal’s parent company recently announced plans to reopen all locations in April 2021), while the third-largest tenant, Planet Fitness (5.5% of NRA), reopened in March 2021. The property’s second-largest tenant, La Curacao, occupies 35.9% of NRA leased through 2024. While the year-end 2019 net cash flow was 5% lower than issuance, the property has maintained strong occupancy of 99% and a year-end 2019 debt service coverage ratio (DSCR) of 1.43 times. DBRS Morningstar analyzed this loan with an elevated probability of default for purposes of this review.

The second-largest specially serviced loan, iPark Hudson Building (Prospectus ID#19; 1.8% of the pool), transferred to special servicing in July 2020 for payment default and has been delinquent since April 2020. The loan is secured by a 150,138-sf multitenant office building in Yonkers, New York. The property had performed well prior to the coronavirus pandemic and faces minimal rollover concerns as three of the property’s four largest tenants have lease expirations in 2027, while the second-largest tenant’s lease expires in 2025. In 2020, the loan sponsor broke ground on a $100 million film and television studio within the iPark Hudson campus, which will feature 70,000 sf of studio space as well as additional office space. The servicer notes that the borrower is attempting to refinance the loan, and an updated appraisal completed in September 2020 valued the property at $39 million, which implies a loan-to-value ratio of 46%.

Ten loans, representing 16.2% of the current trust balance, are on the servicer’s watchlist. These loans are generally being monitored for low DSCRs that have been driven by disruptions related to the coronavirus pandemic. Among the watchlisted loans, DBRS Morningstar’s primary concern is the Westin San Diego loan (Prospectus ID#4; 6.0% of the pool), which is secured by a 436-room full-service hotel in downtown San Diego. The loan had previously transferred to special servicing in April 2020 for imminent default resulting from coronavirus pandemic-related issues and returned to the master servicer unchanged in May 2020 after the borrower withdrew its relief request. The hotel’s performance has languished in recent years, and this poor performance was likely exacerbated by the pandemic. New supply concerns, coupled with the failed extension of the San Diego Convention Center, likely contributed to the decline in performance. In addition, the hotel performed below its competitive set in all three metrics rankings, based on a December 2019 report by Smith Travel Research. The loan remains current and with the master servicer, although the special servicer’s commentary has indicated an imminent transfer for several months dating back to late 2020.

At issuance, DBRS Morningstar assigned an investment-grade shadow rating to 375 Park Avenue (Prospectus ID#1; 20.8% of the pool). With this review, DBRS Morningstar confirmed that the performance of these loans remains consistent with investment-grade loan characteristics.

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 date 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 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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