Fitch Affirms MSBAM 2013-C12

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has affirmed 14 classes of Morgan Stanley Bank of America Merrill Lynch Trust (MSBAM) commercial mortgage pass-through certificates series 2013-C12. A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The affirmations reflect the overall stable performance of the pool. The pool-wide net operating income (NOI) has increased by 9.6% from issuance. The pool has experienced no realized losses to date. Four loans (3.7% of the pool) appear on the servicer watchlist; three loans are due to minor deferred maintenance; the other loan is due to a decrease in the debt service coverage ratio (DSCR). None of the watchlist loans are deemed to be Fitch Loans of Concern and they all remain current.

As of the June 2016 distribution date, the pool's aggregate principal balance has been reduced by 3% to $1.24 billion from $1.28 billion at issuance. Per the servicer reporting, two loans (1.2% of the pool) are defeased. Interest shortfalls are currently affecting class H.

The largest loan (10.3% 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 2015 DSCR was reported to be 2.47x, which is down slightly from 2.79x reported for YE 2014 due to the loan starting to amortize. Occupancy was reported to be 100% as of YE 2015, in line with occupancy at 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+') and the City of New York (36.3% of NRA; rated 'AA'). 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 at YE 2015 was 1.71x 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 (6.5% 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. In-line sales (excluding Apple) for YE 2015 have decreased to $475/ft. compared to $491/ft. reported at issuance. However, occupancy as of YE 2015 was reported to be 100%, which is up from 97% at issuance. The DSCR as of the same period was 1.84x.

There were four variances from criteria related to classes B, C, D and E.. The surveillance criteria indicated that rating upgrades were possible for these classes. However, Fitch has determined that rating upgrades are not warranted at this time as there has been no material improvement to the performance of the pool since issuance and no significant increase in credit enhancement.

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 a material economic or asset level event changes the underlying transaction's portfolio-level metrics.

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:

--$41.9 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 million class B at 'AA-sf'; Outlook Stable;

--$232.9 million class PST* at 'A-sf'; Outlook Stable;

--$52.6 million class C 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;

--$960.3 million class X-A at 'AAAsf'; Outlook Stable.

* Class A-S, class B, and class C certificates may be exchanged for class PST certificates, and class PST certificates may be exchanged for class A-S, class B, and class C certificates.

Fitch does not rate the class H certificates or the interest only class X-C certificates.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 16 Jun 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=882401

Global Structured Finance Rating Criteria (pub. 27 Jun 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=883130

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395

Related Research

Morgan Stanley Bank of America Merrill Lynch Trust, Series 2013-C12 -- Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=722661

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1008581

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1008581

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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View source version on businesswire.com: http://www.businesswire.com/news/home/20160707006322/en/

Fitch Ratings
Primary Analyst
Daniel Anderson
Associate Director
+1-312-606-2305
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Committee Chairperson
R. Brook Sutherland
Senior Director
+1-312-606-2364
or
Media Relations
Sandro Scenga
+1 212-908-0278
New York
[email protected]

Source: Fitch Ratings

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