DBRS Morningstar Confirms Credit Ratings on All Classes of WFRBS Commercial Mortgage Trust 2012-C9

DBRS Inc. (DBRS Morningstar) confirmed its credit ratings on the following classes of Commercial Mortgage Pass-Through Certificates issued by WFRBS Commercial Mortgage Trust 2012-C9:

-- Class D at AAA (sf)
-- Class E at AA (low) (sf)
-- Class F at B (high) (sf)

All trends are Stable. The credit rating confirmations reflect DBRS Morningstar’s recoverability expectations, which remain unchanged since the last rating in November 2022. Since then, one loan has been disposed from the trust. There is only one loan remaining with a scheduled maturity date of October 2024.

Chesterfield Towne Centre (Prospectus ID#1; 100% of the current trust balance), is secured by a 1.0 million-square-foot (sf) regional mall in North Chesterfield, Virginia. The loan, sponsored by Brookfield Properties Group, transferred to the special servicer in September 2022 after the borrower notified the lender that they would not be able to repay the loan upon maturity in October 2022. In August 2023, a retroactive forbearance was executed pushing the maturity to October 2023. The forbearance has been further extended to October 2024, according to servicer commentary. DBRS Morningstar notes the potential for future maturity extensions. As a mitigant, each extension has been conditional upon the borrower making a cash payment on the loan, which has contributed approximately $4.0 million in principal paydown of the loan balance over the past year. The loan is in cash management, and excess funds will be applied to further pay down the loan balance.

The two largest tenants are JCPenney (14.0% of the net rentable area (NRA), operating on a ground lease through October 2050) and Macy's (14.0% of the NRA, with a lease through January 2026). According to the June 2023 rent roll, the property was 96.1% occupied; however, the physical occupancy rate is lower given that the former Sears anchor, which previously represented 14.0% of the NRA on an in-place ground lease through April 2046, closed in 2020. The improvements remain vacant, although rent is still being collected on the ground lease. The servicer reported net cash flow (NCF) for the trailing six-month (T-6) period ended June 30, 2023, was $5.8 million, down from $6.4 million for the same period one year prior. The annualized T-6 NCF implies a DSCR of 1.68 times (x), compared with 1.78x at YE2022, 1.66x at YE2021, and 1.52x at issuance. According to the tenant sales report for the T-12 period ended July 31, 2023, the property reported in-line sales of $415 per square foot (psf), down slightly from $428 psf for YE2022. The property is well located within a commercial corridor that includes prominent retailers such as Costco, Target, and Sam’s Club.

A July 2023 appraisal valued the property at $91.4 million, which is higher than the current outstanding loan amount of $83.1 million. The capital structure includes a first loss piece, unrated by DBRS Morningstar, with a current outstanding balance of $37.5 million. The property could withstand up to a 50% reduction in appraised value before the unrated bond is fully eroded. There is not a significant amount of lease rollover prior to the October 2024 maturity date, and aside from one anchor space going dark, property occupancy has remained consistent throughout the loan term. Although the subject is not considered the dominant mall in the market, steady sales and historical occupancy point to a stable consumer base. Given these factors, DBRS Morningstar believes this loan is well positioned to be resolved with minimal risk of loss to the rated bonds.

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/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 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.

DBRS Morningstar notes that a sensitivity analysis was not performed for this review as the transaction is winding down, with only a few loans remaining. In those cases, the DBRS Morningstar credit ratings are typically based on a recoverability analysis for the remaining loans.

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

The credit 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 (November 3, 2023)/North American CMBS Insight Model v 1.1.0.0 (https://www.dbrsmorningstar.com/research/422859)

DBRS Morningstar North American Commercial Real Estate Property Analysis Criteria (September 22, 2023; https://www.dbrsmorningstar.com/research/420982)

North American Commercial Mortgage Servicer Rankings (August 23, 2023; https://www.dbrsmorningstar.com/research/419592)

Interest Rate Stresses for U.S. Structured Finance Transactions (June 9, 2023; https://www.dbrsmorningstar.com/research/415687)

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].