Fitch Affirms MSBAM 2013-C12
KEY RATING DRIVERS
The affirmations reflect the overall stable performance of the pool. The pool-wide net operating income (NOI) has increased by 5.8% from issuance. The pool has experienced no realized losses to date and no loans are in special servicing. Five loans (5.6% of the pool) appear on the servicer watchlist; two loans, including the eighth largest loan (3.1%), are due to lease rollover risk; the other three are due to debt service coverage ratios (DSCR) below 1.10x as reported on the year-end (YE) 2014 financials. None of the watchlist loans are deemed to be Fitch Loans of Concern and they all remain current.
As of the August 2015 distribution date, the pool's aggregate principal balance has been reduced by 1.9% to \\$1.25 billion from \\$1.28 billion at issuance. No loans are defeased.
The largest loan (10.4% of the pool) is secured by a 408,996 square foot (sf) retail outlet center located in Merrimack, NH. The collateral includes a Saks Fifth Avenue OFF 5TH (6.85% of net rentable area [NRA]), Bloomingdales The Outlet Store (5.85% of NRA), Polo Ralph Lauren (3.86% of NRA), Nike Factory Store (3.18% of NRA) and Gap Outlet Store (2.57% of NRA). The property was completed in June 2012 and is sponsored by Simon Property Group. The YE 2014 DSCR was reported to be 2.79x. Occupancy was reported to be 99% as of first-quarter 2015. Performance at the property has been stable, with NOI up approximately 9.3% from issuance.
The next largest loan (6.9% of the pool) is secured by a leasehold interest in 15 MetroTech Center, a 19-story, class A office tower located in Downtown Brooklyn, NY. The property consists of 649,492 sf, including 642,734 sf of office space, 6,758 sf of ground-floor retail space and 113 below-grade parking spaces. The property was built in 2003 and is one of the newest buildings in MetroTech Center. The loan is sponsored by Forest City Enterprises, Inc., which developed the property in 2003. The property is subject to a 99-year ground lease from the City of New York, which commenced on Dec. 31, 2001. Approximately 97% of the NRA is leased to investment-grade tenants, including WellPoint Holding Corp. (60.4% of NRA; rated 'BBB+' by Fitch) and the City of New York (36.3% of NRA; rated 'AA' by Fitch). The WellPoint lease (60% of NRA) expires in June 2020, and the tenant is expected to vacate upon lease expiration, as most of its space is currently subleased. A reserve was created at closing to sweep 100% of excess cash flow, subject to a cap of \\$4.4 million per year, to fund re-tenanting costs associated with the Wellpoint lease. Performance at the property has been stable. The servicer reported DSCR as YE 2014 was 1.72x compared to 1.51x at issuance. Servicer reported occupancy was 100% as of the same period compared to 97.8% at issuance.
The third largest loan (6.6% of the pool) is secured by City Creek Center, a 626,034 sf, two-story, urban retail and lifestyle center constructed in 2012 (of which 348,637 sf is collateral for the loan) in downtown Salt Lake City, Utah. The property is anchored by Macy's and Nordstrom (both of which are non-collateral), with major tenants including Forever 21, H&M, The Gap, Anthropologie, The Cheesecake Factory, Love Culture and Restoration Hardware. Notable in-line tenants include Apple, Microsoft, Tiffany and Rolex. Inline sales (excluding Apple) for YE 2014 have decreased to \\$432/ft. compared to \\$491/ft. reported at issuance. However, occupancy as of first quarter 2015 was reported to be 100%, which is up from 97% at issuance. The DSCR as of the same period was 1.88x.
RATING SENSITIVITIES
Rating Outlooks on classes A-1 through G remain Stable due to overall stable collateral performance. No rating changes are expected in the next few years unless there is a material deterioration in occupancy or cash flow at any of the properties.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch affirms the following classes as indicated:
--\\$56.3 million class A-1 at 'AAAsf'; Outlook Stable;
--\\$161.2 million class A-2 at 'AAAsf'; Outlook Stable;
--\\$107.2 million class A-SB at 'AAAsf'; Outlook Stable;
--\\$260 million class A-3 at 'AAAsf'; Outlook Stable;
--\\$284.7 million class A-4 at 'AAAsf'; Outlook Stable;
--\\$105.3 million class A-S* at 'AAAsf'; Outlook Stable;
--\\$75.0 million class B* at 'AA-sf'; Outlook Stable;
--\\$52.6 million class C* at 'A-sf'; Outlook Stable;
--\\$232.9 million class PST* at 'A-sf'; Outlook Stable;
--\\$52.6 million class D at 'BBB-sf'; Outlook Stable;
--\\$19.1 million class E at 'BB+sf'; Outlook Stable;
--\\$20.7 million class F at 'BB-sf'; Outlook Stable;
--\\$14.4 million class G at 'B-sf'; Outlook Stable;
--\\$974.7 million class X-A at 'AAAsf'; Outlook Stable.
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