Fitch Affirms WFRBS Commercial Mortgage Trust 2013-C17
KEY RATING DRIVERS
As of the August 2016 distribution date, the pool's aggregate principal balance has been reduced by 2.9% to $878.6 million from $904.4 million at issuance. Currently, there are no specially serviced loans and there is one Fitch Loan of Concern (1.1% of the pool). Three loans totaling 10.5% of the pool are defeased, including the second largest loan in the pool.
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 better than expected with net operating income (NOI) approximately 24.2% above bank underwriting levels. The increase in NOI is largely due to increased room revenue with RevPAR at the subject increasing 15.4% to $163 as of July 2016 TTM from $141 as of August 2013 TTM. Notably, a 198-room tower, which was under renovation at issuance, came back online in 2014. The servicer reported 4.85x debt service coverage ratio (DSCR) for year-end 2015 compared with 4.34x for year-end 2014. Occupancy was 68.2% as of year-end 2015 compared with 69.4% at year-end 2014.
The third largest loan (6.3%) 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 with NOI down 2.5% from issuance. As of year-end 2015 the property was 99.4% occupied versus 98.8% at issuance. Servicer reported year-end 2015 DSCR was 3.16x, compared with year-end 2014 DSCR of 3.04x. Notably, one of the tenants at the property, Sports Chalet (4.7%), recently filed for bankruptcy protection and is no longer in its space.
The Fitch Loan 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. Year-end 2015 DSCR was 1.30x, down from 1.66x at year-end 2014 and 2.41x at year-end 2013. Occupancy also declined to 74.8% as of year-end 2015 compared to 79.7% in 2014 and 85% in 2013. The borrower noted that the decline in operating performance was partially the result of rate reductions granted to top corporate accounts in an effort to remain competitive with the local market. According to a Smith Travel Research report, the hotel is the top performer in RevPAR in its competitive set and has been since 2014.
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.
USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10
No third-party due diligence was provided or reviewed in relation to this rating action.
Fitch has affirmed the following classes:
--$22.7 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.