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

DBRS Inc. (Morningstar DBRS) confirmed its credit 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 credit rating confirmations reflect the continued stable performance of the transaction since the last credit rating action. The loan is secured by the fee and leasehold interest in 490,000 square feet (sf) of the 1.5 million-sf super regional Willowbrook Mall in Wayne, New Jersey. The asset, which is located in an affluent area approximately 15 miles northwest of Manhattan, has exhibited stable year-over-year tenant sales, cash flow, and occupancy. The $360.0 million fixed-rate, interest-only loan 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 Morningstar DBRS), 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 previously backfilled by Shopper’s Find, which vacated in late 2022. The space has since been re-leased to JCPenney, which relocated from the neighboring Wayne Towne Center. Major collateral tenants include Zara (5.1% of the net rentable 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, lease expiry in July 2027). Although there is concentrated rollover in the near term, with leases representing 28.4% of the NRA scheduled to roll prior to loan maturity, Morningstar DBRS believes the property’s track record of attracting new tenants and strong historical occupancy point to a high likelihood of renewal for the majority of these leases. The property, which has seen 97%-98% occupancy since issuance, was 97% occupied as of the March 2024 rent roll.

Tenant sales remain strong, with in-line tenants reporting sales of $710 psf (excluding Apple) for the trailing 12-month period ended March 2024, up from $691 psf for the same period last year. The loan reported a YE2023 net cash flow (NCF) and debt service coverage ratio of $33.4 million and 2.58x, respectively, in-line with YE2022. At issuance, the Issuer’s underwritten NCF was $34.5 million.

Given the loan’s upcoming maturity and lack of amortization, Morningstar DBRS increased its cap rate as a refinance stress. Using the same net cash flow as at last review of $33.4 million, and a higher cap rate of 7.75%, compared to 7.0% used at the prior credit rating action, Morningstar DBRS derived an updated value of $430.8 million. This value implies a Morningstar DBRS loan-to-value (LTV) ratio of 83.6% on the rated debt. Although this is higher than the LTV of 77.0% as based on the Morningstar DBRS value at the time of the last credit rating action, Morningstar DBRS believes the loan will ultimately refinance given the asset’s market positioning, strong historical performance, and experienced sponsorship.

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

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (January 23, 2024; https://dbrs.morningstar.com/research/427030).

All credit ratings are subject to surveillance, which could result in credit ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by Morningstar DBRS.

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

The principal methodology is North American CMBS Surveillance Methodology (March 1, 2024; https://dbrs.morningstar.com/research/428798).

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

The Morningstar DBRS rating assigned to all classes is higher than the results implied by the LTV sizing benchmarks by three or more notches. The variances are warranted given the continued stability in cash flow trends and key performance indicators evidenced over the last several reporting periods. Morningstar DBRS also notes the asset’s strong market positioning and experienced sponsorship provided by a Morningstar DBRS-rated entity as mitigating factors that further support the credit rating confirmations.

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.

Morningstar DBRS 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, Inc.
22 West Washington Street
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://dbrs.morningstar.com/about/methodologies.

North American Single-Asset/Single-Borrower Ratings Methodology (March 1, 2024; https://dbrs.morningstar.com/research/428799)

Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (June 28, 2024; https://dbrs.morningstar.com/research/435293)

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

Legal Criteria for U.S. Structured Finance (April 15, 2024; https://dbrs.morningstar.com/research/431205/legal-criteria-for-us-structured-finance)

For more information on this credit or on this industry, visit dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.