DBRS Morningstar Places All Classes of Morgan Stanley Bank of America Merrill Lynch Trust 2013-C9 Under Review With Negative Implications

DBRS, Inc. (DBRS Morningstar) placed its 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 Under Review with Negative Implications as follows:

-- 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 (sf)

There are no trends for these rating actions.

At the last rating action in February 2023, DBRS Morningstar changed the trend on Class H to Negative from Stable because of ongoing concerns with the largest loan in the pool, Milford Plaza Fee (Prospectus ID#1), which is in special servicing. At that time, the loan represented 24.3% of the pool balance; however, as of the April 2023 remittance, the loan currently represents 51.4% of the pool balance because of loan repayments. This loan is pari passu with the Morgan Stanley Bank of America Merrill Lynch Trust 2013-C10 transaction, which is not rated by DBRS Morningstar. The loan is secured by the ground-leased fee interest under a hotel condominium of the Milford Plaza Hotel, in the Times Square District neighborhood of Manhattan, New York. The outlook surrounding the resolution of the loan had deteriorated as a result of the prolonged workout period and the inability to complete a recent sale with an executed purchase agreement in place. DBRS Morningstar also noted concerns related to the change in use of the hotel and the noncompliance of the hotel tenant to remit cash to the lender.

With the April 2023 remittance, the loan was deemed as nonrecoverable and $17.8 million of loss affected the trust, which eroded about half of the unrated Class J and left an outstanding balance of $18.9 million. In addition, the servicer reported $494,450 of nonrecoverable interest, with a cumulative balance of $1.8 million of interest shortfalls, which affected Classes D through J. DBRS Morningstar has outstanding questions for the servicer related to the calculation performed to reach the nonrecoverability determination amount. The servicer confirmed that the June 2022 appraisal is the most recent report, noting a value of $365.0 million, a decline from the issuance value of $368.0 million but above the outstanding whole-loan balance of $275.0 million. When accounting for outstanding servicer advances and other expenses, the total whole-loan exposure is estimated to be approximately $340.0 million. The servicer indicated an updated appraisal has been ordered.

With this review, given the uncertainty around the nonrecoverability determination for the Milford Plaza Fee loan and the pool has become concentrated since last review as the loan now represents half of the pool balance, DBRS Morningstar placed the ratings of all classes Under Review with Negative Implications until more information becomes available in the coming months. It is DBRS Morningstar’s expectation to evaluate the information as part of the process to resolve the Under Review with Negative Implications status within a 90-day period, but the resolution period may extend further depending on the information received from the servicer.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

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/396929 (May 17, 2022).

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.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is North American CMBS Surveillance Methodology (March 16, 2023; https://www.dbrsmorningstar.com/research/410912).

Other methodologies referenced in this transaction are listed at the end of this press release.

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 rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the rating process for this rating action.

DBRS Morningstar had access to the accounts, management and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

This is a solicited credit rating.

DBRS Morningstar notes a risk sensitivity analysis was not completed for this rating action as the ratings of all classes were placed Under Review with Negative Implications.

This rating is Under Review with Negative Implications. Generally, the conditions that lead to the assignment of reviews are resolved within a 90-day period.

DBRS, Inc.
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Chicago, IL 60602 USA
Tel. +1 312 332-3429

The rating methodologies used in the analysis of this transaction can be found at:
https://www.dbrsmorningstar.com/about/methodologies.

North American CMBS Multi-Borrower Rating Methodology (March 16, 2023)/North American CMBS Insight Model Version 1.1.0.0,
https://www.dbrsmorningstar.com/research/410913.

Rating North American CMBS Interest-Only Certificates (December 19, 2022),
https://www.dbrsmorningstar.com/research/407577.

DBRS Morningstar North American Commercial Real Estate Property Analysis Criteria (September 12, 2022),
https://www.dbrsmorningstar.com/research/402646.

North American Commercial Mortgage Servicer Rankings (September 8, 2022),
https://www.dbrsmorningstar.com/research/402499.

Interest Rate Stresses for U.S. Structured Finance Transactions (August 30, 2022), https://www.dbrsmorningstar.com/research/402153.

Legal Criteria for U.S. Structured Finance (December 7, 2022),
https://www.dbrsmorningstar.com/research/407008.

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