Fitch Affirms SCG Trust 2013-SRP1

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed one class of SCG Trust 2013-SRP1 commercial pass-through certificates, series 2013-SRP1 (Starwood Retail Portfolio). A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The affirmation and Stable Outlook reflect the stable performance of the portfolio as expected since issuance. The transaction certificates represent the beneficial interests in a three-year (plus two one-year extension options), floating-rate interest-only mortgage loan with a balance of $760 million. The certificates follow a sequential-pay structure.

The loan is secured and cross-collateralized by the Starwood Mall Portfolio, which includes Franklin Park Mall in Toledo, OH; West Covina Mall in West Covina, CA; Parkway Mall in El Cajon, CA; Capital Mall in Olympia, WA; and Great Northern Mall in North Olmsted, OH. Anchor tenants include JC Penney (five properties), Macy's (four properties), Sears (three properties), Dillards (two properties), and Wal-Mart (one property). The properties total approximately 5.8 million square feet, of which approximately 3.6 million serves as collateral for the loan. Proceeds of the loan were used to acquire the properties and pay closing costs. The sponsor is a joint venture among affiliates of Starwood Capital Group, L.P. (SCG; 90%) and Westfield Group (10%).

As of year to date (YTD) June 30 2015, the combined portfolio occupancy reported at 92.3%, a slight decline from 95.6% in June 2014. In line sales reported at $393 per square foot (psf) for trailing 12 month (TTM) June 2015, an increase from prior year sales at $370 psf. The TTM June 2015 sales information was provided for 11 out of the 16 anchor tenants, and reflected flat to slightly improved performance since issuance. Provided anchor sales include four of the five JC Penney stores and two out of the three Sears stores, of which three JC Penney and one Sears reported gross sales above their respective national averages. There is anchor tenant rollover within the next 12 months at the Great Northern Mall, where JC Penney's (non-collateral; $16.5 million sales as of TTM June 2015) lease is scheduled to expire in November 2016. According to the servicer, notice from the borrower regarding the lease extension is expected in the next few weeks.

The combined net cash flow (NCF) debt service coverage ratio (DSCR) for YTD June 2015 reported flat with June 2014 at 3.80x; the year end (YE) December 2014 NCF DSCR reported at 4.30x. The YE December 2014 NCF is approximately 10.6% above Fitch NCF at issuance; annualized YTD June 2015 NCF is approximately 2% below Fitch NCF at issuance. Fitch's stressed DSCR and loan-to-value (LTV) for the entire trust is currently 0.94x and 96.4%, respectively, compared to 0.96x and 94.5% at issuance. Fitch's stressed DSCR and LTV on class A, the only class rated by Fitch in this transaction, is currently 2.16x and 42%, respectively, compared to 2.20x and 41.0% at issuance.

RATING SENSITIVITIES

The Rating Outlook for class A remains Stable. No rating actions are anticipated unless there are material changes in property performance or cash flow. The portfolio is performing as expected at issuance.

DUE DILIGENCE USAGE

No third party due diligence was provided or reviewed in relation to this rating action.

Fitch has affirmed the following class:

--$330 million class A at 'AAAsf'; Outlook Stable.

Fitch does not rate the class A-J, B, C, D, E, and V certificates. The classes X-CP and X-NCP certificates were not part of the final structure of this transaction and had been previously withdrawn.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions (pub. 27 Aug 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=870009

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

Related Research

SCG Trust 2013-SRP1, Series 2013-SRP1 -- Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=739516

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=995841

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=995841

Endorsement Policy

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

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20151202006427/en/

Fitch Ratings
Primary Analyst
Benson Thomas, +1-212-908-0645
Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson:
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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