Fitch Affirms WFRBS Commercial Mortgage Trust 2013-C7
KEY RATING DRIVERS
The affirmations are due to the overall stable performance of the underlying collateral pool. Fitch reviewed the most recently available financial performance data for the pool, as well as updated rent rolls for the top 15 loans, which represent 54.3% of the transaction. Of the loans in the pool, 98.8% reported 2014 year-end financials.
As of the September 2015 distribution date, the pool's aggregate principal balance has been reduced by 1.7% to \\$889.2 million from \\$904.4 million at issuance. Currently, there are no specially serviced or defeased loans. Fitch has designated two loans (1.8%) as Fitch Loans of Concern, both of which are also reported on the servicer Watchlist. The Fitch Loans of Concern, though underperforming expectations at issuance, continue to perform and Fitch does not anticipate imminent default at this time.
The largest loan in the pool, Hilton Sandestin Beach Resort & Spa (8.4%), is a 10-year interest-only (I/O) loan secured by a 598-room full service beachfront hotel located within the 2,400-acre Sandestin Resort in Destin, Florida. The loan is performing in line with underwriting expectations. The servicer reported 4.34x debt service coverage ratio (DSCR) for year-end 2014 compared with 3.93x for year-end 2013. Occupancy was 69% as of year-end 2014 and was up from 66% at year-end 2013. This is in part due to the 2014 completion of a 198-room tower, which was under renovation at issuance. The second largest loan, Matrix Portfolio (7.3%), is a five-year partial I/O loan (i.e., interest-only for the initial 12 months) secured by a portfolio of 11 cross-collateralized and cross-defaulted manufactured housing communities located in Michigan (10 properties) and Alabama (one property) totaling 5,347 pads, including 840 park-owned homes. The portfolio consists of seven all-age and four age-restricted properties. The loan has a companion \\$69.5 million pari-passu note which is part of the GS 2013-J16 transaction. The loan is performing in line with issuer underwriting expectations. The servicer reported year-end 2014 portfolio DSCR and occupancy rate were 1.74x and 65.1%, compared to 1.51x and 69.6% at issuance.
The third largest loan (6.1%) is secured by 997,549 square feet (sf) of the 1.6 million sf Westfield Mission Valley Mall in San Diego, CA. The property is well-located just north of San Diego, immediately off of Interstate 8. The Westfield Mission Valley Mall has 115 stores and is anchored by Macy's (non-collateral), Target, Bed Bath & Beyond and Nordstrom Rack. The loan has a companion \\$100 million pari-passu note which is part of the WFRBS 2013-C16 transaction. The collateral is performing roughly in line with underwritten expectations. As of March 2015, the property was 96.1% occupied versus 98.8% as of year-end 2014. Servicer reported year-end 2014 DSCR was 2.92x, compared to 2013 year-end DSCR of 2.99x.
One of the Fitch Loans of Concern, Staybridge Suites - Minot, is a 102-room hotel located in Minot, North Dakota. The property has exhibited significantly weaker financial performance as a result of the floundering oil and gas exploration in North Dakota. Second quarter 2015 (2Q15) DSCR was 1.40x, down from 1.66x at year-end 2014 and 2.41x at year-end 2013. The borrower noted that this was largely a result of rate reductions granted to top corporate accounts in an effort to remain competitive with the local market. Occupancy also declined to 77% as of 2Q15 compared to 80% in 2014 and 85% in 2013.
RATING SENSITIVITIES
The Rating Outlooks on all classes remain Stable. Fitch does not foresee positive or negative ratings migration until a material economic or asset level event changes the transaction's overall portfolio-level metrics. Additional information on rating sensitivity is available in the report 'WFRBS Commercial Mortgage Trust 2013-C17' (Feb. 5, 2014), available at www.fitchratings.com.
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:
--\\$33.3 million class A-1 at 'AAAsf', Outlook Stable;
--\\$166.9 million class A-2 at 'AAAsf', Outlook Stable;
--\\$125 million class A-3 at 'AAAsf', Outlook Stable;
--\\$236.9 million class A-4 at 'AAAsf', Outlook Stable;
--\\$55.8 million class A-SB at 'AAAsf', Outlook Stable;
--\\$73.5 million class A-S at 'AAAsf', Outlook Stable;
--\\$58.8 million class B at 'AA-sf', Outlook Stable;
--\\$31.6 million class C at 'A-sf', Outlook Stable;
--\\$47.5 million class D at 'BBB-sf', Outlook Stable;
--\\$15.8 million class E at 'BBsf', Outlook Stable;
--\\$9 million class F at 'Bsf', Outlook Stable;
--Interest - Only class X-A at 'AAAsf'; Outlook Stable;
--Interest - Only class X-B at 'AA-sf'; Outlook Stable.
Fitch does not rate the class G or class X-C certificates.
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