Morningstar DBRS Confirms Credit Ratings on Morgan Stanley Bank of America Merrill Lynch Trust 2013-C11

DBRS, Inc. (Morningstar DBRS) confirmed the credit ratings on both classes of Commercial Mortgage Pass-Through Certificates, Series 2013-C11 issued by Morgan Stanley Bank of America Merrill Lynch Trust 2013-C11 as follows:

-- Class A-S at BBB (high) (sf)
-- Class B at C (sf)

The trend on Class A-S is Stable while Class B has a credit rating that does not typically carry a trend in commercial mortgage-backed securities (CMBS) credit ratings.

Since the previous Morningstar DBRS credit rating action in December 2023, there has been no resolution to the last three outstanding loans, which were the only loans remaining in the transaction at that time. The servicer has provided updated appraisals for two of the three loans, however, Morningstar DBRS' loss expectations remain unchanged and are primarily driven by the largest loan, Westfield Countryside (Prospectus ID#1; 70.2% of the pool balance).

The loan is secured by the in-line space of a 1.3 million-square foot regional mall in Clearwater, Florida. The mall's noncollateral anchors are Nordstrom Rack, Macy's, Dillard's, and JC Penney. A fifth anchor pad previously occupied by Sears closed in 2018 but has been partially backfilled by Whole Foods. The occupancy rate and net cash flow have improved over the past year, as of the YE2023 reporting, at 71.0% and $9.2 million, respectively. The loan transferred to special servicing in June 2020 for imminent default and a receiver was appointed in January 2021. The sponsor, Unibail-Rodamco-Westfield, is reportedly cooperating in a friendly foreclosure action and, according to investor reporting, the special servicer is marketing the asset for sale. Recent servicer commentary indicates a potential buyer has been identified, but it is unclear when a sale of the asset may be executed. An October 2023 appraisal valued the subject at $116.0 million, below the outstanding whole-loan balance of $136.1 million.

Given the concentration of defaulted loans remaining, Morningstar DBRS considered liquidation scenarios based on conservative stresses to the most recent appraised values to determine the recoverability of the remaining bonds. Morningstar DBRS concluded projected losses for the remaining loans are likely to be contained to the Class B certificate, currently rated C (sf). Morningstar DBRS remains concerned, however, about the increased propensity for interest shortfalls, which could affect Class A-S should the resolution periods for the defaulted loans extend beyond the near to medium term, further exposing the trust to increased fees and expenses. Since the previous credit rating action, cumulative interest shortfalls have increased by approximately $1.0 million. Neither of the remaining Morningstar DBRS-rated bonds are being shorted interest due as of the October 2024 remittance. Should Morningstar DBRS' loss expectations increase, or should Class A-S experience full or partial untimely interest payments, Morningstar DBRS may consider an additional credit rating action.

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.
 
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 Factors in Credit Ratings (August 13, 2024) at https://dbrs.morningstar.com/research/437781.

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 16, 2023 https://www.dbrsmorningstar.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 three loans remaining. In such cases, Morningstar DBRS credit ratings are typically based on a recoverability analysis.

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://dbrs.morningstar.com/about/methodologies.

-- North American CMBS Multi-Borrower Rating Methodology (March 1, 2024), and North American CMBS Insight Model v 1.2.0.0, 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.