DBRS Morningstar Confirms All Ratings on BWAY Commercial Mortgage Securities Trust 2013-1515

DBRS Limited (DBRS Morningstar) confirmed the following ratings on the Commercial Mortgage Pass-Through Certificates, Series 2013-1515 issued by BWAY Commercial Mortgage Securities Trust 2013-1515:

-- Class A1 at AAA (sf)
-- Class A2 at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (high) (sf)
-- Class C at AA (low) (sf)
-- Class D at A (sf)
-- Class X-B at A (sf)
-- Class E at A (low) (sf)
-- Class F at BBB (sf)
-- Class G at BBB (low) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the underlying collateral, which remains in line with DBRS Morningstar’s expectations.

The transaction is collateralized by an $814.4 million loan secured by the fee interest in a Class A, 1.7 million-square-foot (sf) office tower in the heart of Times Square, within the Midtown Manhattan submarket of New York City. The collateral also features 31,000-sf of ground-floor retail, a four-level, 225-space subterranean parking garage, and two 48-foot by 38-foot LED signage displays.

Loan proceeds were primarily used to refinance existing debt of approximately $779.0 million, fund a reserve for the borrower’s obligations under the Viacom Inc. (Viacom) lease, pay for closing costs, and return approximately $116.0 million of equity to the sponsor. Subsequent to an initial 36-month interest-only (IO) period, the 12-year term loan started amortizing in March 2016 based on a 30-year schedule. As of February 2022, the trust balance amortized by approximately 11.3% to $798.7 million from $900.0 million at issuance. The loan’s sponsor is SL Green.

Since 1989, the property has served as the global headquarters for Viacom (96.0% of the net rentable area (NRA), expiring in June 2031), an American media company whose flagship networks include Nickelodeon and MTV. At Viacom’s June 2019 lease renewal, the company absorbed 256,479 sf of available space at the property as a result of its growth and expansion needs. Additionally, Viacom’s lease is also structured with a $78.0 million free rent concession that occurs between 2019 and 2024. The annual concessions from 2020 to 2024 range from $2.4 million to $3.0 million.

Other notable tenants at the property include the Minskoff Theatre (6.0% of NRA, expiring in June 2044), the sixth-largest Broadway theatre (currently hosting Disney’s “The Lion King” musical production), and the RAD Theater, a concert and event space venue formerly known as the PlayStation Theater, which signed a 20-year lease in late 2019. Amid the Coronavirus Disease (COVID-19) pandemic, both venues were closed and are expected to face traffic and booking declines through the next few years as the coronavirus pandemic continues to affect business. According to a July 2021 Spectrum News article, the Minskoff Theatre resumed operations as of September 14, 2021.

According to Reis, as of October 2021, the property’s asking rent is $55.82 per sf (psf), below the Midtown West submarket average rental rate of $68.95 psf. According to the year-to-date ending September 30, 2021, financials, net cash flow (NCF) was reported at $55.1 million, or an annualized figure of $68.9 million, a decline from the YE2020 figure of $72.0 million, and at issuance when the Issuer’s underwritten NCF was $74.1 million. Although repairs and maintenance and other expenses have leveled off in 2021, effective gross income (EGI) has declined by approximately 4.3% to the annualized September 2021 figure $122.5 million from the YE2020 EGI of $127.9 million, as a result of Viacom’s rent concessions, and the 93.5% decline in (annualized) percentage rent, which is heavily dependent on the theatres’ traffic. The September 2021 reporting showed 100.0% occupancy at the property.

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/373262.

Class X-A and X-B are 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 ratings are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by DBRS Morningstar.

DBRS Morningstar provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for this transaction.

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com The platform includes loan-level data for most outstanding CMBS transactions (including non-DBRS Morningstar-rated), as well as loan-level and transaction-level commentary for most DBRS Morningstar-rated and -monitored transactions.

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

The principal methodology is North American CMBS Surveillance Methodology (March 26, 2021), which can be found on dbrsmorningstar.com under Methodologies & Criteria. For a list of the structured-finance-related methodologies that may be used during the rating process, please see the DBRS Morningstar Global Structured Finance Related Methodologies document, which can be found on dbrsmorningstar.com in the Commentary tab under Regulatory Affairs. Please note that not every related methodology listed under a principal structured finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

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/baseline-macroeconomic-scenarios-application-to-credit-ratings.

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@dbrsmorningstar.com.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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