DBRS Morningstar Confirms All Classes of Morgan Stanley Bank of America Merrill Lynch Trust 2013-C9, Maintains Negative Trend on One Class

DBRS, Inc. (DBRS Morningstar) confirmed the ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2013-C9 issued by Morgan Stanley Bank of America Merrill Lynch Trust 2013-C9 as follows:

-- Class A-3 at AAA (sf)
-- Class A-3FL at AAA (sf)
-- Class A-3FX at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-AB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (high) (sf)
-- Class X-B at AA (high) (sf)
-- Class C at AA (sf)
-- Class PST at AA (sf)
-- Class D at A (low) (sf)
-- Class E at BBB (high) (sf)
-- Class F at BBB (sf)
-- Class G at BB (high) (sf)
-- Class H at B (high) (sf)

The trends on all classes are Stable, with the exception of Class H, which has a Negative trend.

The Negative trend is largely reflective of the increased risk for the pool related to the extended delinquency of the largest loan in the pool, Milford Plaza Fee (Prospectus ID#1; 18.3% of the pool), which is in special servicing, as well as the occupancy decline at the collateral property backing the largest loan on the servicer’s watchlist, Apthorp Retail Condominium (Prospectus ID#5; 6.1% of the pool). While the occupancy rate at the Apthorp Retail Condominium property seems to be improving, DBRS Morningstar is watching for the ultimate resolution of the Milford Plaza Fee loan, given its significant concentration of the collateral pool.

Milford Plaza Fee is secured by the ground-leased fee interest under a hotel condominium of The Milford Plaza Hotel, in the Times Square-Theater District neighborhood of Manhattan. The loan transferred to special servicing in June 2020 because of imminent monetary default with debt service payments last remitted in April 2020. According to the servicer, the tenant under the ground lease defaulted on the ground rent in April 2020 and a foreclosure complaint has been filed; however, no foreclosure sale has been scheduled to date. The special servicer is proceeding with the sale and subsequent loan assumption of the collateral that would dissolve the ground lease. Due to an unprecedented decrease in lodging demand amid the Coronavirus Disease pandemic, much of the hotel’s business throughout the pandemic has been driven by a contract user and management only began to accept transient reservations in August 2021. The hotel’s food and beverage program will remain closed until management determines occupancy rates are sufficient to reopen the facilities. As of the July 2021 appraisal, the subject reported an as-is value of $324.0 million, down from the August 2020 appraised value of $378.0 million. Servicer advances continue to accrue, totaling $16.3 million as of January 2022, and the loan exposure is nearing a loan-to-value ratio of 100%.

Apthorp Retail Condominium is secured by the fee interest in the retail component of The Apthorp, a 12-story, 161-unit luxury residential condominium in Manhattan. This loan has been on the servicer’s watchlist because of the low debt service coverage ratio (DSCR) and low occupancy rate. The DSCR decline was driven by the loss of Successful Vision Corp, which previously represented 15% of net rentable area and vacated in October 2018, ahead of its lease expiration in 2027. In addition, Apthorp Pharmacy also unexpectedly vacated in Q2 2020, well ahead of its December 2027 lease expiration. According to the servicer, the former Successful Vision Corp. space has been backfilled and another smaller space has been leased as well, which will bring the occupancy rate to approximately 74% from 56%. The servicer also reported there has been potential interest in, and ongoing negotiations for, the remaining vacant spaces. In the most recent trailing six months ended June 30, 2021, the DSCR was 1.03 times (x), up from the YE2020 DSCR of 0.99x.

At issuance, the trust comprised 60 fixed-rate loans secured by 77 commercial properties with a trust balance of $1.28 billion. According to the January 2022 remittance report, 50 loans secured by 54 properties remain in the trust with a trust balance of $901.3 million, representing a 29.4% collateral reduction since issuance. Eleven loans, totaling 32.2% of the trust balance, are defeased. The trust is concentrated by property type as loans secured by retail properties comprise 37.9% of the trust balance. Four of the 10 largest loans in the pool, representing 17.5% of the trust balance, are secured by retail properties.

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/389454.

Classes X-A and X-B 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 – Milford Plaza Fee (18.3% % of the pool)
-- Prospectus ID#4 – Dartmouth Mall (6.1% of the pool)
-- Prospectus ID#5 – Apthorp Retail Condominium (6.1% 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 26, 2021), which can be found at dbrsmorningstar.com/about/methodologies. Links to the methodology referenced in this transaction are listed at the end of this press release. 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.

The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482.

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.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar’s outlooks and ratings are monitored.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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