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Rating Action:

Moody's affirms eleven classes of MSBAM 2013-C12

29 Oct 2019

Approximately $879.7 million of structured securities affected

New York, October 29, 2019 -- Moody's Investors Service, ("Moody's") has affirmed the ratings on eleven classes in Morgan Stanley Bank of America Merrill Lynch Trust 2013-C12, Commercial Mortgage Pass-Through Certificates as follows:

Cl. A-SB, Affirmed Aaa (sf); previously on Jul 19, 2018 Affirmed Aaa (sf)

Cl. A-3, Affirmed Aaa (sf); previously on Jul 19, 2018 Affirmed Aaa (sf)

Cl. A-4, Affirmed Aaa (sf); previously on Jul 19, 2018 Affirmed Aaa (sf)

Cl. A-S, Affirmed Aaa (sf); previously on Jul 19, 2018 Affirmed Aaa (sf)

Cl. B, Affirmed Aa3 (sf); previously on Jul 19, 2018 Affirmed Aa3 (sf)

Cl. C, Affirmed A3 (sf); previously on Jul 19, 2018 Affirmed A3 (sf)

Cl. D, Affirmed Baa3 (sf); previously on Jul 19, 2018 Affirmed Baa3 (sf)

Cl. E, Affirmed Ba2 (sf); previously on Jul 19, 2018 Affirmed Ba2 (sf)

Cl. F, Affirmed B1 (sf); previously on Jul 19, 2018 Affirmed B1 (sf)

Cl. X-A*, Affirmed Aaa (sf); previously on Jul 19, 2018 Affirmed Aaa (sf)

Cl. PST**, Affirmed A1 (sf); previously on Jul 19, 2018 Affirmed A1 (sf)

* Reflects Interest Only Classes

** Reflects Exchangeable Classes

RATINGS RATIONALE

The ratings on nine P&I classes were affirmed because the transaction's key metrics, including Moody's loan-to-value (LTV) ratio, Moody's stressed debt service coverage ratio (DSCR) and the transaction's Herfindahl Index (Herf), are within acceptable ranges.

The rating on the IO class was affirmed based on the credit quality of its referenced classes.

The rating on class PST was affirmed due to the credit quality of its referenced exchangeable classes.

Moody's rating action reflects a base expected loss of 4.5% of the current pooled balance, compared to 3.4% at Moody's last review. Moody's base expected loss plus realized losses is now 3.3% of the original pooled balance, compared to 3.1% at the last review. Moody's provides a current list of base expected losses for conduit and fusion CMBS transactions on moodys.com at http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF215255.

FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS:

The performance expectations for a given variable indicate Moody's forward-looking view of the likely range of performance over the medium term. Performance that falls outside the given range can indicate that the collateral's credit quality is stronger or weaker than Moody's had previously expected.

Factors that could lead to an upgrade of the ratings include a significant amount of loan paydowns or amortization, an increase in the pool's share of defeasance or an improvement in pool performance.

Factors that could lead to a downgrade of the ratings include a decline in the performance of the pool, loan concentration, an increase in realized and expected losses from specially serviced and troubled loans or interest shortfalls.

METHODOLOGY UNDERLYING THE RATING ACTION

The methodologies used in rating all classes except exchangeable classes and interest-only classes were "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in July 2017 and "Moody's Approach to Rating Large Loan and Single Asset/Single Borrower CMBS" published in July 2017. The principal methodology used in rating exchangeable classes was "Moody's Approach to Rating Repackaged Securities" published in March 2019. The methodologies used in rating interest-only classes were "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in July 2017, "Moody's Approach to Rating Large Loan and Single Asset/Single Borrower CMBS" published in July 2017, and "Moody's Approach to Rating Structured Finance Interest-Only (IO) Securities" published in February 2019. Please see the list of ratings at the top of this announcement to identify which classes are interest-only (indicated by the *) and exchangeable classes (indicated by the **). Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

DEAL PERFORMANCE

As of the October 2019 distribution date, the transaction's aggregate certificate balance has decreased by 27% to $937 million from $1.28 billion at securitization. The certificates are collateralized by 56 mortgage loans ranging in size from less than 1% to 13% of the pool, with the top ten loans (excluding defeasance) constituting 58% of the pool. Five loans, constituting 4.2% of the pool, have defeased and are secured by US government securities.

Moody's uses a variation of Herf to measure the diversity of loan sizes, where a higher number represents greater diversity. Loan concentration has an important bearing on potential rating volatility, including the risk of multiple notch downgrades under adverse circumstances. The credit neutral Herf score is 40. The pool has a Herf of 19, compared to 26 at Moody's last review.

Five loans, constituting 14% of the pool, are on the master servicer's watchlist. The watchlist includes loans that meet certain portfolio review guidelines established as part of the CRE Finance Council (CREFC) monthly reporting package. As part of Moody's ongoing monitoring of a transaction, the agency reviews the watchlist to assess which loans have material issues that could affect performance.

The only specially serviced loan is the Deer Springs Town Center ($27.4 million -- 2.9% of the pool), which is secured by a 185,000 square foot (SF) anchored retail center located in North Las Vegas, Nevada. The loan became delinquent and transferred to special servicing in October 2018 following the closure of their former largest tenant, Toys R Us (65,705 SF, 34% of the NRA). A Receiver was appointed in July 2019 and is working with the property manager to renew upcoming lease expirations and fill the vacant spaces. As of December 2018, the property was 63% leased, down from 98% at year-end 2017.

Moody's has also assumed a high default probability for two poorly performing loans, constituting 2.3% of the pool. Both loans are secured by student housing properties serving the student population at the University of North Dakota and are located in Grand Forks, ND. Property performance has declined at both properties due to a decline in revenue and increased expenses.

Moody's has estimated an aggregate loss of $16 million (a 33% expected loss based on average) from these specially serviced and troubled loans.

Moody's received full year 2018 operating results for 100% of the pool, and full or partial year 2019 operating results for 93% of the pool (excluding specially serviced and defeased loans). Moody's weighted average conduit LTV is 93%, unchanged from Moody's last review. Moody's conduit component excludes loans with structured credit assessments, defeased and CTL loans, and specially serviced and troubled loans. Moody's net cash flow (NCF) reflects a weighted average haircut of 16% to the most recently available net operating income (NOI). Moody's value reflects a weighted average capitalization rate of 9.5%.

Moody's actual and stressed conduit DSCRs are 1.54X and 1.15X, respectively, compared to 1.62X and 1.16X at the last review. Moody's actual DSCR is based on Moody's NCF and the loan's actual debt service. Moody's stressed DSCR is based on Moody's NCF and a 9.25% stress rate the agency applied to the loan balance.

The top three conduit loans represent 29% of the pool balance. The largest loan is the Merrimack Premium Outlets Loan ($119.6 million -- 13% of the pool), which is secured by a 409,000 SF outlet center located in Merrimack, NH, approximately ten miles north of the Massachusetts/ New Hampshire border. The property was developed in 2012 by Simon Property Group. As of September 2019, the property was 96% leased, down slightly from 97% at year-end 2018. The property benefits from limited competition and considered to be the dominant shopping center in its trade area. The loan benefits from amortization and has paid down 8% since securitization. Moody's LTV and stressed DSCR are 89% and 1.10X, respectively, compared to 91% and 1.07X at the last review.

The second largest loan is the 15 MetroTech Center Loan ($78.2 million -- 8.3% of the pool), which represents a pari passu portion of a $147.9 million mortgage loan. The loan is secured the borrower's leasehold interest in a 21-story, Class A office building in Brooklyn, NY. The property is situated within Brookfield's MetroTech Center, a multi-block office campus which totals approximately 5.5 million SF. The loan is on the watchlist due to the upcoming June 2020 lease expiration of WellPoint Inc., representing 60% of the NRA and 61% of the 2018 base rent. At securitization, WellPoint subleased 92% of their space to seven subtenants and the loan was structured with cash sweeps (capped at $4.4 million per year) to re-tenant the space. WellPoint has confirmed they will not be renewing their lease and the loan's tenant improvement reserve totaled $32.2 million as of September 2019. The property has benefited from a tax PILOT incentive that began burning off in the 2018/2019 tax year and will be reduced by 10% per year until the PILOT amount is equal to the real property taxes assessed. Moody's LTV and stressed DSCR are 85% and 1.14X, respectively, compared to 82% and 1.18X at the last review.

The third largest loan is the City Creek Center Loan ($75.6 million -- 8.1% of the pool), which is secured by a 348,537 SF portion of a 628,934 SF regional mall located in Salt Lake City, Utah. City Creek Center opened in March 2012 and is part of a $1.5 billion mixed-used redevelopment of downtown Salt Lake City. In addition to the subject property, the development contains 2.1 million SF of office space, 800 multi-family units and a 4,000-space subterranean garage. The center is anchored by Macy's and Nordstrom. Both anchor units are owned by their respective tenants and are not contributed as collateral for the loan. The borrower owns a leasehold interest in the majority of the collateral and a fee interest in three restaurants. The ground-lease is with the Church of Latter-day Saints with an initial term of 30 years through March 21, 2042 and four additional 10-year options. As of June 2019, the property was 97% leased, compared to 100% at year-end 2018. However, the property's year-end 2018 NOI was nearly 15% lower than underwritten levels, primarily due to increased operating expenses. Additionally as part of its bankruptcy filing in September 2019, Forever 21 (38,225 SF, 11% of the NRA, 9.1% of 2018 base rent), included this location as one of its underperforming stores it may close. The loan has amortized 11% since securitization and Moody's LTV and stressed DSCR are 86% and 1.10X, respectively, compared to 75% and 1.23X at the last review.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions of the disclosure form.

The analysis includes an assessment of collateral characteristics and performance to determine the expected collateral loss or a range of expected collateral losses or cash flows to the rated instruments. As a second step, Moody's estimates expected collateral losses or cash flows using a quantitative tool that takes into account credit enhancement, loss allocation and other structural features, to derive the expected loss for each rated instrument.

Moody's did not use any stress scenario simulations in its analysis.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Nicola Gomes
Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Matthew Halpern
VP - Senior Credit Officer
Structured Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
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