Approximately $721.7 million of structured securities affected
New York, November 12, 2020 -- Moody's Investors Service, ("Moody's") has
affirmed the ratings on seven classes and downgraded the ratings on two
classes in WFRBS Commercial Mortgage Trust 2013-C18, Commercial
Mortgage Pass-Through Certificates, Series 2013-C18
as follows:
Cl. A-3, Affirmed Aaa (sf); previously on November
26, 2019 Affirmed Aaa (sf)
Cl. A-4, Affirmed Aaa (sf); previously on November
26, 2019 Affirmed Aaa (sf)
Cl. A-5, Affirmed Aaa (sf); previously on November
26, 2019 Affirmed Aaa (sf)
Cl. A-S, Affirmed Aaa (sf); previously on November
26, 2019 Affirmed Aaa (sf)
Cl. A-SB, Affirmed Aaa (sf); previously on November
26, 2019 Affirmed Aaa (sf)
Cl. B, Affirmed Aa3 (sf); previously on November 26,
2019 Affirmed Aa3 (sf)
Cl. C, Downgraded to Baa2 (sf); previously on November
26, 2019 Affirmed A3 (sf)
Cl. X-A*, Affirmed Aaa (sf); previously on
November 26, 2019 Affirmed Aaa (sf)
Cl. PEX**, Downgraded to A2 (sf); previously
on November 26, 2019 Affirmed A1 (sf)
* Reflects interest-only classes
** Reflects exchangeable classes
RATINGS RATIONALE
The ratings on six 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 one P&I Class, Class C, was downgraded due
to a decline in pool performance and higher anticipated losses driven
primarily from three hotel loans: JFK Hilton Loan (7.3%
of the pool), Hotel Felix Chicago Loan (5.3%) and
HIE at Magnificent Mile Loan (2.6%), which were already
experiencing declining net operating income (NOI) prior to the coronavirus
outbreak.
The rating on the IO class was affirmed based on the credit quality of
the referenced classes.
The rating on the exchangeable class, Cl. PEX, was
downgraded due to a decline in credit quality of the referenced exchangeable
classes.
The coronavirus outbreak, the government measures put in place to
contain it, and the weak global economic outlook continue to disrupt
economies and credit markets across sectors and regions. Our analysis
has considered the effect on the performance of commercial real estate
from the current weak US economic activity and a gradual recovery for
the coming months. Although an economic recovery is underway,
it is tenuous and its continuation will be closely tied to containment
of the virus. As a result, the degree of uncertainty around
our forecasts is unusually high. Stress on commercial real estate
properties will be most directly stemming from declines in hotel occupancies
(particularly related to conference or other group attendance) and declines
in foot traffic and sales for non-essential items at retail properties.
We regard the coronavirus outbreak as a social risk under our ESG framework,
given the substantial implications for public health and safety.
Moody's rating action reflects a base expected loss of 11.2%
of the current pooled balance, compared to 5.6% at
Moody's last review. Moody's base expected loss plus realized
losses is now 9.2% of the original pooled balance,
compared to 4.7% 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 September 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1244778
and "Moody's Approach to Rating Large Loan and Single Asset/Single Borrower
CMBS" published in September 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1190579.
The principal methodology used in rating exchangeable classes was "Moody's
Approach to Rating Repackaged Securities" published in June 2020 and available
at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1230078.
The methodologies used in rating interest-only classes were "Approach
to Rating US and Canadian Conduit/Fusion CMBS" published in September
2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1244778,
"Moody's Approach to Rating Large Loan and Single Asset/Single Borrower
CMBS" published in September 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1190579
and "Moody's Approach to Rating Structured Finance Interest-Only
(IO) Securities" published in February 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1111179.
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 **). Alternatively, please
see the Rating Methodologies page on www.moodys.com for
a copy of these methodologies.
DEAL PERFORMANCE
As of the October 19, 2020 distribution date, the transaction's
aggregate certificate balance has decreased by 18% to $854
million from $1.0 billion at securitization. The
certificates are collateralized by 60 mortgage loans ranging in size from
less than 1% to 18% of the pool, with the top ten
loans (excluding defeasance) constituting 72% of the pool.
Two loans, constituting 34% of the pool, have investment-grade
structured credit assessments. Four loans, constituting 1%
of the pool, have defeased and are secured by US government securities.
The pool contains thirteen low leverage cooperative loans, constituting
3% of the pool balance, that were too small to credit assess;
however, have Moody's leverage that is consistent with other loans
previously assigned an investment grade Structured Credit Assessments.
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 11,
the same as at Moody's last review.
As of the October 2020 remittance report, loans representing 79%
were current or within their grace period on their debt service payments,
3% were beyond their grace period but less than 30 days delinquent
and 15% were more than 90 days delinquent.
Seventeen loans, constituting 28% of the pool, are
on the master servicer's watchlist, of which five loans,
representing 17% of the pool, indicate the borrower has requested
relief in relation to coronavirus impact on the property. 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.
One loan has been liquidated from the pool. Four loans, constituting
18% of the pool, are currently in special servicing.
Three of the specially serviced loans, representing 15% of
the pool, have transferred to special servicing since March 2020.
The largest specially serviced loan is the JFK Hilton Loan ($62.3
million -- 7.3% of the pool), which
is secured by a 12-story, 356-room full-service
hotel located in Jamaica, New York. The property is located
less than 1 mile north of John F. Kennedy International Airport.
In 2012, the sponsor invested $21 million to redevelop and
re-flag the property as a full-service Hilton. For
the trailing twelve months (TTM) ending March 2020, the occupancy,
ADR and RevPar were 87.9%, $186.28 and
$163.72, respectively compared to 93.9%,
$189.87 and $178.29, respectively for
TTM ending Mar 2019. The loan transferred on a Non-Transfer
(NT) basis in April 2020 for coronavirus related relief and has since
been transferred to special servicing in August 2020. Discussions
are ongoing between the lender and borrower, including the use of
FF&E reserves for six months of principal & interest payments,
with the borrower funding the remainder of the monthly shortfalls,
including tax & insurance escrows, as well as operating expenses.
The second largest specially serviced loan is the Hotel Felix Chicago
Loan ($45.5 million -- 5.3% of the pool),
which is secured by which is secured by a 12-story, 225-room
limited service boutique hotel located in downtown Chicago, Illinois's
"Gold Coast" neighborhood. The property was redeveloped in 2009
for $35 million, becoming silver LEED certified. The
loan transferred to the special servicer on April 5, 2018 due to
payment delinquency and cash management was triggered. Subsequently,
the loan was returned to the master servicer in February 2019 upon renegotiating
the terms of the loan payments. The loan is converted into an interest-only
loan until June 2021. The loan will convert back to an amortizing
loan effective June 2021 payment. The loan transferred again to
special servicing in April 2020 due to imminent monetary default due to
the coronavirus outbreak. The special servicer has indicated that
they are proceeding with receivership and foreclosure while dual tracking
negotiations with the borrower.
The third largest specially serviced loan is the HIE at Magnificent Mile
Loan ($21.9 million -- 2.6% of the pool),
which is secured by 174-room limited-service hotel located
in downtown Chicago, Illinois. The hotel is on the corner
of North Wabash Ave and East Ontario St within the Magnificent Mile neighborhood,
approximately two miles west of Michigan Ave. The property was
originally constructed in 1927 and operated as an independent hotel until
being acquired by the sponsor in 2006. The June 2020 TTM occupancy,
ADR and RevPar were 71.1%, $130.18 and
$92.5, respectively. The loan transferred to
special servicing in April 2020 for imminent default in relation to the
coronavirus outbreak. The special servicer is proceeding with receivership
and foreclosure while dual tracking negotiations with the borrower.
The remaining specially serviced loan is secured by an office property.
Moody's has also assumed a high default probability for one poorly
performing loan, constituting 1% of the pool, and has
estimated an aggregate loss of $88.1 million (a 55%
expected loss on average) from these troubled loans and specially serviced
loans.
Moody's received full year 2019 operating results for 96% of the
pool, and full or partial year 2020 operating results for 90%
of the pool (excluding specially serviced and defeased loans).
Moody's weighted average conduit LTV is 90%, compared
to 97% at 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 28% to the most recently available net operating income (NOI).
Moody's value reflects a weighted average capitalization rate of
10.4%.
Moody's actual and stressed conduit DSCRs are 1.56X and 1.28X,
respectively, compared to 1.55X and 1.24X 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 first loan with a structured credit assessment is the Garden State
Plaza Loan ($150.0 million -- 17.6%
of the pool), which represents a 28.6% pari-passu
portion of a $525 million senior mortgage. The loan is secured
by a 2.2 million square foot (SF) super-regional mall located
in Paramus, New Jersey. The four anchor stores are owned
by their respective tenants, Macy's, Nordstrom, Neiman
Marcus and Lord & Taylor, and are on ground leases, while
a vacant JC Penney box is part of the collateral. The property
underwent a $159 million re-development, which includes
a new 1,800 space parking deck and the addition of about 81,330
SF of retail space. As of June 2020, the total mall was 83%
leased, compared to 85% as of June 2019 and 89% leased
as of June 2018. According to the March 2020 rent roll, the
inline (total mall excluding anchors) occupancy was 81%.
Moody's structured credit assessment and stressed DSCR are aaa (sca.pd)
and 1.81X, respectively, compared to aaa (sca.pd)
and 1.88X at the last review.
The second loan with a structured credit assessment is The Outlet Collection
| Jersey Gardens Loan ($140.0 million -- 16.4%
of the pool), which represents a 40% pari-passu portion
of a $350 million senior mortgage. The loan is secured by
a 1.3 million SF regional outlet center mall located in Elizabeth,
New Jersey. In 2013, the sponsor invested $30 million
for renovations to the corridors, entrances, restrooms and
food court. As of the July 2020 rent roll, the property was
90% occupied, compared to 96% as of June 2019 and
98% as of March 2018. Average in line tenant sales (Tenants
<10,000 SF) for TTM ending June 2020 was $881 PSF compared
to $1,009 for TTM ending June 2019. Moody's structured
credit assessment and stressed DSCR are a2 (sca.pd) and 1.51X.
The loan is scheduled to pay off in November 2020.
The top three conduit loans represent 19% of the pool balance.
The largest loan is the AmericasMart Loan ($119.1 million
-- 14.0% of the pool), which represents
a pari-passu portion of a $476.4 million senior mortgage.
The loan is secured by a 4.56 million SF wholesale trade mart center
located in Atlanta, Georgia. The property is comprised of
3.5 million SF of permanent showroom space occupied by more than
1,500 tenants and about 1.1 million SF of exhibition space
that is leased to tenants during various trade shows. As of June
2020, the weighted average occupancy was 86%, compared
to 89% in June 2019 and 91% in March 2018. Moody's
LTV and stressed DSCR are 84% and 1.42X, respectively,
compared to 82% and 1.46X at the last review.
The second largest loan is the Hudson Mall Loan ($22.2 million
-- 2.6% of the pool), which is secured by a 282,782
SF retail property, and an additional 99,476 SF of ground
leased space located in Jersey City, New Jersey. The property
was built in 1966 as a smaller retail strip, and was redeveloped
as an enclosed mall in 1978. In 2000, existing in-line
space was reconfigured to create the Staples and Marshalls anchor spaces.
The mall transitioned from an enclosed mall to a power center.
Currently, the property comprises eight buildings and is anchored
by Marshalls, Big Lots, Asian Food Market, Staples,
Old Navy, Retro Fitness and Chuck E Cheese. As of the June
2020 rent roll, the collateral portion was 85% leased,
compared to 81% as of December 2019, 82% as of December
2018 and 96% at securitization. The total property was 80%
leased. The loan has amortized 11% since securitization.
Moody's LTV and stressed DSCR are 98% and 1.16X, respectively.
The third largest loan is the 200-400 West 45th Loan ($16.9
million -- 2.0% of the pool), which is secured
by two adjacent office buildings, located in Fargo, North
Dakota. The buildings were originally built in 1998, and
renovated in 2005, with the sponsor converting the 200-400
West 45th Street Property from an industrial property to a mixed-use
office property in 2007-2008. Per the June 2020 rent roll,
the property was 97% leased, unchanged from December 2019
and 99% at securitization. Moody's LTV and stressed DSCR
are 109% and 0.99X, respectively.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and
sensitivity analysis, see the sections Methodology Assumptions and
Sensitivity to Assumptions in the disclosure form. Moody's
Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
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.
The ratings have been disclosed to the rated entity or its designated
agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody's Policy
for Designating and Assigning Unsolicited Credit Ratings available on
its website www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.
At least one ESG consideration was material to the credit rating action(s)
announced and described above.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the EU and is endorsed
by Moody's Deutschland GmbH, An der Welle 5, Frankfurt
am Main 60322, Germany, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that issued the credit rating is available on www.moodys.com.
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.
Suzanna Sava
Vice President - Senior 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
Romina Padhi
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
