Morningstar DBRS Confirms Credit Ratings on All Classes of Morgan Stanley Bank of America Merrill Lynch Trust 2013-C9, Changes Trends to Positive

DBRS Limited (Morningstar DBRS) confirmed its credit ratings on all classes of the Commercial Mortgage Pass-Through Certificates, Series 2013-C9 issued by Morgan Stanley Bank of America Merrill Lynch Trust 2013-C9 as follows:

-- Class B at BBB (sf)
-- Class C at CCC (sf)
-- Class D at CCC (sf)
-- Class E at CCC (sf)
-- Class F at CCC (sf)
-- Class PST at CCC (sf)
-- Class X-B at CCC (sf)
-- Class G at C (sf)
-- Class H at C (sf)

All trends are now Positive.

Morningstar DBRS changed the trends on all classes to Positive, reflective of the modification of the largest loan in the pool, Milford Plaza Fee (Prospectus ID#1, 72.9% of the pool), and subsequent repayment of nearly all the accumulated unpaid bondholder interest, which totaled $8.4 million at the time of Morningstar DBRS' last rating action. Previously, interest had been withheld from all bonds below Class C for more than a year prompting the previous credit rating downgrades throughout the capital stack. This stemmed from the performance deterioration of the Milford Plaza Fee loan, which had been in special servicing since June 2020, and the servicer's own evaluation of non-recoverability in April 2023. At the last review in February 2024, the transaction reported approximately $18.5 million in realized trust losses.

Since the last credit rating action, the Milford Plaza Fee loan has been modified, as discussed further below, and nearly all of the $8.4 million in shorted interest was repaid. In addition, approximately $9.5 million in advances that were previously deemed non-recoverable and had been passed through as a realized trust loss were also recovered, reducing the actual realized loss to the trust to $8.5 million as of the December 2024 remittance.

Only three of the original 60 loans remain in the pool with no additional paydowns or liquidations since the last credit rating action in February 2024. There are now no loans in special servicing but two of the loans, representing 95.2% of the pool remain on the servicer's watchlist due to a recent transfer back to the master servicer and performance related concerns.

At issuance, the Milford Plaza Fee loan was secured by the borrower's leased fee interest in the ground beneath the 1,331-key hotel currently known as The Row NYC in the Times Square-Theatre District in New York City. The $275 million whole loan, which has a pari passu structure with pieces contributed to the subject transaction ($165 million) and to the non-Morningstar DBRS-rated MSBAM 2013-C10 transaction ($110 million), has been brought current and returned back to the master servicer following a loan modification that was executed in May 2024. The previous delinquent tenant and owner of the leasehold interest, Highgate Holdings purchased the land and assumed the subject loan in conjunction with the modification. Collateral for the loan now consists of the new borrower's fee simple interest in both the ground and improvements of the Row NYC hotel. The modification included an extension of the maturity date to June 2028. In addition, the ground lease was terminated, cash management will be in place until a full payoff has occurred, and the new sponsor was required to provide a renovation guaranty and fund a capex reserve. The master servicer confirmed that $14.1 million in protective advances have been paid to reimburse fees and advances previously deemed non-recoverable while the loan was in special servicing.

The borrower has extended its agreement with the city of New York to house migrants at the subject property through April 2026 at a reduced rate of $175 per night compared to the previous rate of $190 per night. The loan reported an annualized net cash flow (NCF) figure of $78.2 million for the trailing six-month period ended June 30, 2024, which appears to include the hotel operations. The fee simple value was appraised at $350 million in April 2024, which is slightly below the May 2023 appraised value of $375 million and the issuance appraised value of $386 million. Although the loan has been reinstated and is no longer in special servicing, Morningstar DBRS' analysis included recoverability scenario based on a stress to the most recent appraisal, which indicates that a full recovery of the loan could be possible. This recoverability determination was considered a primary driver in the change of trend on all Classes to Positive. Despite these positive developments, Morningstar DBRS' ratings for the remainder of the capital stack have been confirmed at this time to allow for continued seasoning of the loan's performance following the loan modification.

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 factor(s) 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); https://dbrs.morningstar.com/research/437781.

Class X-B is an interest-only (IO) certificates that reference a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated applicable reference obligation tranche adjusted upward by one notch if senior in the waterfall.

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 (December 13, 2024); https://dbrs.morningstar.com/research/444617

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

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 info-DBRS@morningstar.com.

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.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS' outlooks and credit ratings are monitored.

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

-- North American CMBS Multi-Borrower Rating Methodology (December 13, 2024);
https://dbrs.morningstar.com/research/444616

--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 (December 03, 2024);
https://dbrs.morningstar.com/research/444064

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

A description of how Morningstar DBRS analyzes structured finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/417279.(July 17, 2023).

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