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Rating Action:

Moody's affirms seven and downgrades two classes of WFRBS 2013-C18

12 Nov 2020

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

No Related Data.
© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

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Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

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MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

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