DBRS Morningstar Confirms All Classes of WFRBS Commercial Mortgage Trust 2013-C17

DBRS, Inc. (DBRS Morningstar) confirmed the ratings of the Commercial Mortgage Pass-Through Certificates, Series 2013-C17 issued by WFRBS Commercial Mortgage Trust 2013-C17 (the Trust) as follows:

-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-S at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class B at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class C at AA (low) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (sf)
-- Class X-C at BB (low) (sf)
-- Class F at B (high) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since the last review. At issuance, the Trust was comprised of 84 loans secured by 134 commercial and multifamily properties with a trust balance of $904.4 million. As of the February 2022 remittance report, 74 loans remain with an outstanding pool balance of $614.7 million, representing a collateral reduction of 32.0% since issuance. Since DBRS Morningstar’s last rating action, one loan with an issuance balance of $9.9 million was liquidated from the pool with a 91.8% loan-level loss severity, contributing $8.1 million in realized loss to the Trust. This trust loss, which was contained to the unrated Class G certificate, has been the only realized loss since issuance. The pool continues to amortize and all outstanding loans are scheduled to mature in 2023.

The pool is fairly concentrated by property type, with 32.6% of the pool secured by retail properties and 25.5% of the pool secured by lodging properties. Since the last rating action, the two largest hospitality loans, Hilton Sandestin Beach Golf Resort and Spa (Prospectus ID#1, 12.2% of the pool) and the Courtyard by Marriott Santa Barbara Goleta (Prospectus ID#6, 4.2% of the pool), have exhibited improvements in performance. Both loans experienced significant declines in performance through 2020 and into 2021 as a result of low travel volumes during the pandemic. According to the September 2021 financial statements, revenues and occupancy at both properties appear to be restabilizing, with the Q3 2021 debt service coverage ratios (DSCRs) nearing or exceeding pre-pandemic reporting.

There are 12 loans, representing 13.9% of the pool, which are on the servicer’s watchlist and being monitored primarily for low DSCRs and occupancy-related issues. DBRS Morningstar’s primary concern across the pool’s watchlisted loans is associated with the Midway Atriums (Prospectus ID#23, 1.6% of pool), which is secured by a Class B, 255,619-square foot, suburban office property in Addison, Texas. Property occupancy has decreased to 34% as of September 2021, down from 66% at year-end 2020. Occupancy was trending downward prior to 2020; but, according to the servicer, the pandemic exacerbated tenant vacancies and leasing activity. As of September 2021, the loan had a DSCR of 0.61x. The declining performance, combined with upcoming rollover, a softening submarket, and the loan’s upcoming maturity indicate increased default risk for this loan.

The pool’s only specially serviced loan, Baymont Hospitality Portfolio (Prospectus ID#41, 0.9% of the pool), transferred to special servicing in August 2019 for imminent default but has remained current. The loan is secured by a portfolio of three limited-service hotels totaling 294 keys. Two of the hotels are located in Kalamazoo, Michigan, while the third hotel is located in Battle Creek, Michigan. The loan is expected to return back to the master servicer in the near term conditional upon the curing of non-monetary defaults. Despite the loan’s pending resolution, its performance continues to trail issuance expectations and has reported a below breakeven DSCR since 2019. As of September 2021, the DSCR was 0.82x.

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.

Classes X-A, X-B, and X-C are 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 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 the following loans in the transaction:

-- Prospectus ID#23 – Midway Atriums (1.6% of the pool)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com. The platform includes issuer and servicer 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 4, 2022), 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 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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