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

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

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

All trends are Stable.

The credit rating confirmations reflect Morningstar DBRS' recoverability expectations, which remain relatively unchanged since the previous credit rating action in November 2023. The sole loan remaining in the trust, 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 the Richmond suburb of North Chesterfield, Virginia, which had a scheduled maturity date of October 2024; however, as confirmed by the servicer, the borrower has provided notice that the loan would not be repaid at maturity.

The loan, which is 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 the original loan maturity in October 2022. In August 2023, a retroactive forbearance was executed, pushing the maturity first to October 2023 and later, to October 2024. At the previous credit rating action Morningstar DBRS noted the high likelihood of future maturity extensions given the lack of significant improvement in the refinance prospects given the cash flow and occupancy trends observed over the past few years. Although the need for multiple extensions to the loan maturity are generally viewed as increasing risks, Morningstar DBRS does note that the terms of the extensions have included required principal paydowns and ongoing cash management, with excess funds applied to further pay down the loan balance. Since the previous credit rating action, the principal balance has been reduced by nearly $9.0 million.

The collateral mall is anchored by JCPenney (in place on a ground lease through 2050), Macy's and At Home (lease expirations in 2026 and 2025, respectively), with a dark Sears anchor in place, as well. The servicer most recently reported a physical occupancy rate hovering near 82.0% as of June 2024. The Sears rent is still being paid and the ground lease runs through 2046. Cash flows have been reported between $1.4 million and $1.8 million above the issuer's net cash flow figure for the last few years, with the debt service coverage ratio hovering between 1.65 times (x) and 1.81x since YE2022. According to the tenant sales report for the T-12 period ended July 31, 2024, the property reported in-line sales of about $415 per square foot (psf), relatively unchanged from the YE2023 figure. Although the subject is not considered the dominant mall in the area, it is well located within a commercial corridor that includes prominent retailers such as Costco, Target, and Sam's Club.

A March 2024 appraisal valued the property at $84.1 million, down from the July 2023 appraised value of $91.4 million. The implied loan-to-value (LTV) ratio is 88.0% on the March 2024 appraisal and the current exposure; the implied LTV is generally in line with the figures considered as part of Morningstar DBRS' last review, given the commensurate principal paydown with the maturity extension. Morningstar DBRS expects the property value could decline further given the near-term rollover scheduled for Macy's and At Home, as well as some in-line tenants. In addition, the sales are relatively lackluster and the longstanding vacant status of the Sears box, which closed in 2020, could deter potential investors if the borrower or servicer ultimately markets the property for sale. While these factors are noteworthy, Morningstar DBRS also notes that the appraised value could be reduced by more than half before a loss fully erodes the unrated Class G balance of $37.5 million, supporting the credit rating confirmations with this review.

Morningstar DBRS' credit ratings on the applicable classes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transactions' respective press releases at issuance.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

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

Morningstar DBRS notes that a sensitivity analysis was not performed for this review as the transaction is in wind down, with only one loan remaining. In such cases, Morningstar DBRS credit ratings are typically based on a recoverability analysis.

DBRS, Inc.
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The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

-- North American CMBS Multi-Borrower Rating Methodology (March 01, 2024; https://dbrs.morningstar.com/research/428797)

-- Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (September 19, 2024; https://dbrs.morningstar.com/research/439702)

-- Legal Criteria for U.S. Structured Finance (October 28, 2024; https://dbrs.morningstar.com/research/441840)

-- North American Commercial Mortgage Servicer Rankings (August 23, 2024; https://dbrs.morningstar.com/research/438283)

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