DBRS Morningstar Confirms All Classes of COMM 2013-CCRE11 Mortgage Trust

DBRS Limited (DBRS Morningstar) confirmed all ratings on the classes of the Commercial Mortgage Pass-Through Certificates, Series 2013-CCRE11 issued by COMM 2013-CCRE11 Mortgage Trust as follows:

-- Class A-SB at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class X-A at AAA (sf)
-- Class A-M at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (high) (sf)
-- Class X-B at BBB (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.

Performance has generally been in line with DBRS Morningstar’s expectations at issuance, with the February 2022 remittance showing one small loan in special servicing and collateral reduction of 14.1% since the transaction closed, supporting the rating confirmations with this review. The pool also benefits from significant defeasance, with 18 loans representing 44.1% of the current pool balance, showing defeased as of the February 2022 remittance. DBRS Morningstar notes that one loan, One Wilshire (Prospectus ID#6, 7.3% of the pool) has a pari passu loan piece secured in the COMM 2013-CCRE10 transaction, which is also rated by DBRS Morningstar. The February 2022 remittance for that transaction showed the One Wilshire loan had been defeased. DBRS Morningstar expects the piece in the subject transaction to reflect the same with the March 2022 remittance. As the servicer has confirmed the defeasance closed, and the companion loan was reported defeased, DBRS Morningstar assumed a defeasance scenario for the loan in the analysis for this review.

The Miracle Mile Shops (Prospectus ID#1, 12.6% of the pool) is the largest loan in the pool and is secured by a super-regional mall in Las Vegas. The loan is on the servicer’s watchlist because of a decline in net cash flow, with the trailing nine month ended September 31, 2021, debt service coverage ratio (DSCR) reported at 1.09 times (x), compared with the DBRS Morningstar DSCR at issuance of 1.15x. Cash flow disruptions have been attributed to rent abatements granted during the Coronavirus Disease (COVID-19) pandemic. The servicer previously approved a loan modification to allow for a deferral of principal payments for a seven-month period, which has since expired with all deferred amounts repaid in full. The loan is cash managed, and the servicer reported a cash reserve balance of $5.4 million as of January 2022.

The Oglethorpe Mall loan (Prospectus ID#5, 7.7% of the pool) is secured by a 627,000-square foot (sf) portion of a 943,000 sf regional mall in Savannah, Georgia. The loan has been on the DBRS Morningstar hotlist since the departure of the noncollateral Sears in 2018, and the loan is being monitored on the servicer’s watchlist for the same reason. The loan sponsor is Brookfield Property Partners, and the mall is anchored by a noncollateral Belk, a collateral Macy’s (21.5% of the net rentable area (NRA); lease expires in February 2023), and JCPenney (13.7% of the NRA; lease expires in July 2022). The servicer confirmed that Macy’s exercised its five-year extension option with a new lease expiration of February 2028; the servicer reports the sponsor expects a renewal for JCPenney, but nothing has been finalized to date.

The dark Sears box is owned by Seritage Growth Properties (Seritage), and the plan is to redevelop the space into a multifamily complex. Seritage is working with the city to rezone the site for residential development. A DBRS Morningstar analyst visited the property in September 2021 and found the overall condition to be Average, with the property’s location within a well-trafficked commercial corridor, which suggested an apartment development would be attractive to potential renters living in the area. The mall is a mix of inline- and external-entry stores and restaurants and was relatively busy during the visit on a Friday afternoon. This loan is scheduled to mature in July 2023, and although there have been developments since issuance that suggest increased risks for this loan on the departure of Sears and the decline in general performance of all three department store anchors that remain, DBRS Morningstar notes the subject property is generally well positioned as the only regional mall within a relatively large trade area. Prior to the pandemic, property revenues were largely consistent with the figures at issuance, suggesting any value decline since the loan’s closing should be moderate. Given the upcoming maturity and the dark anchor box, the loan was analyzed with a probability of default penalty to increase the expected loss for this review.

At issuance, the One Wilshire loan was shadow-rated investment grade. With this review, the loan was analyzed with a defeasance scenario that assumed a principal paydown equal to the loan balance in accordance with the waterfall structure, as previously discussed.

ESG CONSIDERATIONS
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 updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Prospectus ID#1 – Miracle Mile Shops (12.6% of the pool)
-- Prospectus ID#5 – Oglethorpe Mall (7.7% 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 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.

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/baseline-macroeconomic-scenarios-application-to-credit-ratings.

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.

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

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