DBRS Morningstar Confirms All Ratings on BAMLL Commercial Mortgage Securities Trust 2013-WBRK

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

-- Class A at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (sf)
-- Class D at BBB (high) (sf)
-- Class E at BBB (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since the last review, which remains in line with DBRS Morningstar’s expectations as exhibited by a strong occupancy rate and in-line sales performance. The loan is secured by the fee and leasehold interest in 490,000 square feet (sf) of a 1.5 million-sf super-regional mall, Willowbrook Mall, in Wayne, New Jersey. The mall is in an affluent area of New Jersey, approximately 15 miles northwest of Manhattan.

The $360.0 million fixed-rate loan has a 12-year term and is scheduled to mature in March 2025. The loan sponsor and operator is Brookfield Property Partners L.P. (rated BBB (low) with a Stable trend by DBRS Morningstar), which acquired the property through its acquisition of General Growth Partners in 2018.

At issuance, the noncollateral anchors included Bloomingdale’s, Macy’s, Sears, and Lord & Taylor. The majority of the Sears space is now occupied by Dave & Buster’s, Yard House, and BJ’s Wholesale Club. The former Lord & Taylor space was backfilled by Shopper’s Find in June 2021 but has vacated in late 2022. Per the March 2023 rent roll, the collateral occupancy was 93.3%, which is generally consistent with the March 2022 occupancy rate of 94.8% and only slightly below the issuance occupancy rate of 97.5%. The largest collateral tenants include Zara (5.1% of the net rental area (NRA), lease expiry in July 2027), H&M (4.9% of the NRA, lease expiry in January 2029), and Old Navy (4.0% of the NRA, July 2027). There is minimal tenant rollover risk as less than 10.0% of the NRA have leases that will be expiring in the next 12 months.

DBRS Morningstar notes that sales have consistently rebounded and remained stable in recent years following the downturn during the Coronavirus Disease (COVID-19) pandemic. According to the tenant sales report for the trailing 12 month (T-12) period ended March 31, 2023, in-line tenants occupying less than 10,000 sf reported sales of $902 per square foot (psf), inclusive of Apple. Excluding Apple’s sales, in-line tenants averaged sales of $691 psf, slightly below the T-12 ended March 31, 2022 sales of $709 psf. Although down year over year, in-line sales (excluding Apple) continue to surpass the pre-pandemic sales, which were reported at $658 psf for YE2019.

Tenants occupying more than 10,000 sf of space reported T-12 period ended March 31, 2023, sales of $513.34 psf, an improvement from the T-12 period ended March 31, 2022, figure of $410.53 psf and the YE2019 figure of $458.00 psf. In addition, the 12-screen theatre, Cinemark, reported sales of more than $590,000 per screen as of the T-12 period ended March 31, 2023, which is an improvement from the sales of $325,000 per screen for the T-12 period ended March 31, 2022.

Based on the most recent financials, the loan reported a YE2022 debt service coverage ratio (DSCR) of 2.58 times (x), an improvement from the YE2021 DSCR of 2.48x, but below the YE2020 figure of 2.79x and YE2019 figure of 3.19x.

In the analysis for this review, DBRS Morningstar considered an updated value based on a haircut to the $33.4 million net cash flow for YE2022 with a capitalization rate of 7.0%, resulting in an updated DBRS Morningstar value of $467.4 million. This represents a haircut of 25.2% from the issuance value of $625.0 million and a 19.2% haircut from the DBRS Morningstar value derived in 2020 during the “North American Single-Asset/Single-Borrower Ratings Methodology” update. DBRS Morningstar applied positive qualitative adjustments totaling 1.50% to account for property quality and market fundamentals. The updated DBRS Morningstar value implies a loan-to-value (LTV) ratio of 77.0%, compared with the LTV of 62.2% in 2020.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factor(s) 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/416784 (July 4, 2023).

All credit ratings are subject to surveillance, which could result in credit 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 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 credit rating was initiated at the request of the rated entity.

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

This is a solicited credit rating.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577

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

North American Single-Asset/Single-Borrower Ratings Methodology (February 23, 2023)
https://www.dbrsmorningstar.com/research/410191

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

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 (June 9, 2023)
https://www.dbrsmorningstar.com/research/415687

A description of how DBRS Morningstar analyzes structured finance transactions and how the methodologies are collectively applied can be found at https://www.dbrsmorningstar.com/research/417279.

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