Morningstar DBRS Confirms Remaining Credit Rating of WFRBS Commercial Mortgage Trust 2013-C18

DBRS Limited (Morningstar DBRS) confirmed its credit rating on the remaining class of Commercial Mortgage Pass-Through Certificates, Series 2013-C18 issued by WFRBS Commercial Mortgage Trust 2013-C18 as follows:

-- Class D at C (sf)

There is no trend as the class has a credit rating that does not typically carry a trend in commercial mortgage-backed securities (CMBS) credit ratings.

Since the last credit rating action, 44 loans have been repaid in full and one loan was liquidated from the trust, resulting in only two loans remaining as of the September 2024 remittance, both of which are in special servicing. Given this concentration, Morningstar DBRS' analysis was based on a recoverability analysis. The credit rating confirmation on Class D reflects Morningstar DBRS' continued expectation that the certificate will incur losses, based on the recoverability analysis. The loss expectations are primarily attributed to the Cedar Rapid Office Portfolio (79.2% of the pool). The special servicer has deemed outstanding advances, totaling $7.7 million as of September 2024, as nonrecoverable. As such, Morningstar DBRS expects a full loss of the $20.0 million loan balance upon disposition., which would fully erode the remaining certificate balance of Class E, which has already defaulted, and erode the certificate balance of Class D by over 50%.

The Cedar Rapids Office Portfolio has been real estate owned since June 2020. The asset comprises two cross-collateralized Class A office buildings in Cedar Rapids, Iowa. In June 2023, the buildings were appraised at a combined as-is value of $6.0 million, an 84.0% decline from the issuance appraised value of $36.2 million. According to media sources, 600 Third Avenue (22.5% of the allocated loan amount (ALA)) was sold for $2.3 million in January 2024; however, there has not been a principal paydown reflecting a property release. Town Center Office (77.5% of the ALA) was appraised at an individual as-is value of $2.2 million, indicating a combined as-is property value of $4.5 million. Based on the implied loan-to-value ratio (LTV) of more than 500% on total loan exposure, Morningstar DBRS expects a full loss.

Staybridge Suites Royersford (21.8% of the pool) is secured by a 105-unit, extended stay hotel in Royersford, Pennsylvania. The loan was transferred to special servicing in December 2023 for maturity default and is listed as a performing matured balloon loan with the September 2024 reporting. Property-level cash flow has been negative since the onset of the pandemic and the lender is currently dual tracking foreclosure. The property was reappraised for $6.4 million in January 2024, a 57% drop from the issuance appraisal of $14.9 million. When applying a conservative haircut to the most recent appraisal, the loan would have an implied LTV approaching 100% based on total loan exposure, indicating the potential for loss upon disposition.

Morningstar DBRS' credit rating on the applicable class addresses the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transaction's press release at issuance.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS   
There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.
 
A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024), https://dbrs.morningstar.com/research/437781.

All credit ratings are subject to surveillance, which could result in credit ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by Morningstar DBRS.

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

The principal methodology is North American CMBS Surveillance Methodology (March 1, 2024), https://dbrs.morningstar.com/research/428798.

Other methodologies referenced in this transaction are listed at the end of this press release.

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-DBRS@morningstar.com.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

Morningstar DBRS notes that a sensitivity analysis was not performed for this review as the transaction is winding down, with only two loans remaining. In such cases, Morningstar DBRS credit ratings are typically based on a recoverability analysis.

Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The Morningstar DBRS Long-Term Obligation Rating Scale definition indicates that credit ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

DBRS Limited
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Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

-- North American CMBS Multi-Borrower Rating Methodology (March 1, 2024)/North American CMBS Insight Model v 1.2.0.0, https://dbrs.morningstar.com/research/428797

-- Morningstar DBRS Commercial Real Estate Property Analysis Criteria (September 19, 2024), https://dbrs.morningstar.com/research/439702

-- North American Commercial Mortgage Servicer Rankings (August 23, 2024), https://dbrs.morningstar.com/research/438283

-- Legal Criteria for U.S. Structured Finance (April 15, 2024), https://dbrs.morningstar.com/research/431205

A description of how Morningstar DBRS analyzes structured finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/417279.

For more information on this credit or on this industry, visit https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.