Press Release|CMBS
KBRA Affirms All Ratings for JPMBB 2013-C12
12 Apr 2024 | New York
KBRA affirms all of its outstanding ratings for JPMBB 2013-C12, a $174.8 million CMBS conduit transaction. The affirmations follow a surveillance review of the transaction and are based on the performance and expected recovery of the transaction's remaining seven assets. As of the March 2024 remittance period, two assets (29.0%) are specially serviced including one REO asset (5.5%). KBRA identified four K-LOCs (90.4%), including three (71.4%) with estimated losses. The remaining three loans (9.6%) were structured with anticipated repayment dates (ARDs) with final maturities ranging from June 2028 to January 2035. The details of the K-LOCs are outlined below.
IDS Center (largest, 42.4%, K-LOC, Underperform)
- The loan is collateralized by a 1.4 million sf, 57-story office tower, an eight-story annex office building, a two-story retail center and a subterranean parking structure with 655 spaces located in downtown Minneapolis, Minnesota. The Marquette Hotel, a 19-story, 'AAA Four Diamond' hotel is connected to the property but is not part of the collateral for the loan.
- KBRA maintains the loan's K-LOC designation and its KPO of Underperform based on its history with the special servicer and occupancy concerns. The loan transferred to the special servicer in February 2023 for imminent maturity default ahead of its scheduled May 2023 maturity date. The loan has been modified to extend maturity to June 2025 and transferred back to the master servicer in March 2024. According to the December 2023 rent roll, the property is 70.1% leased, compared to 74.7% at last review and 89.0% at closing. In addition, the Nordstrom Rack (2.7% of sf, 2.9% of base rent) at the property closed in November 2022 prior to its 2027 lease expiration.
- The servicer-reported occupancies and DSCs are: 75.3% / 1.89x (YTD June 2023), 73.9% / 1.18x (FY 2021), 73.4% / 1.24x (FY 2020); at closing, these were 89.0% / 1.68x. An appraisal dated May 2023 valued the property at $180.0 million ($128 per sf), which represents a 29.7% decrease from its $256.0 million ($182 per sf) value at securitization. KBRA's analysis resulted in an estimated loss given default of $15.3 million (10.2% estimated loss severity) on the whole loan balance of $150.2 million.
Southridge Mall (2nd largest, 23.5%, K-LOC, Underperform, Non-Performing Matured Balloon)
- The loan is collateralized by a 553,801 sf portion of a 1.2 million sf, two-level regional mall located 12 miles southwest of the Milwaukee, Wisconsin CBD. At closing, anchor tenants included Macy's and Kohl's. Kohl’s closed its store in September 2018 ahead of its 2020 lease expiration in order to relocate to a nearby mixed-use development project less than two miles away. At issuance, the mall was also anchored by three non-collateral retailers, which owned their improvements and the underlying land. These included Boston Store, JCPenney, and Sears. Since closing, both the Boston Store and Sears have closed. Sears, which is a part of Seritage, has been re-tenanted by TJ Maxx, Dick’s Sporting Goods, Golf Galaxy, and Round 1 Bowling and Amusement Complex. However, the Boston Store still remains vacant at this time.
- KBRA maintains the loan’s K-LOC designation and its KPO of Underperform based on its status with the special servicer as a result of a continued decline in operating performance and failure to payoff at its June 2023 maturity date. The loan transferred to special servicing in July 2020 for imminent monetary default. At closing, the sponsor was Simon, however, Spinoso was appointed as receiver in December 2020 and continues to operate the property. According to the special servicer, changes to the existing reciprocal easement agreement are being considered. If this is updated, the property may subsequently be listed for sale.
- The servicer-reported occupancies and DSCs are: 74.1% / 0.66x (FY 2023), 77.9% / 0.83x (FY 2022), 79.6% / 0.82x (FY 2021); at closing, these were 95.0% / 1.53x. An appraisal dated August 2023 valued the property at $41.2 million ($74 per sf), which is 77.2% below the $181.0 million ($327 per sf) value at issuance. As a result, the asset carries an ARA of $28.6 million, resulting in a cumulative ASER of $526,691. KBRA's analysis resulted in an estimated loss of $77.1 million (75.1% estimated loss severity) on the whole loan balance of $102.6 million.
408-416 Fulton Street (3rd largest, 19.1%, K-LOC, Underperform, Watchlist)
- The loan is collateralized by a 55,287 sf retail building located in downtown Brooklyn, New York, which borders the neighborhood of Brooklyn Heights.
- KBRA maintains the loan’s K-LOC designation and its KPO of Underperform based on low physical occupancy. According to the October 2023 rent roll, the subject property was 37.4% leased, unchanged from last review and down from 100% at securitization. At issuance, Apogee, a vintage thrift store chain, accounted for 87.2% of sf and 40.0% of base rent. The tenant vacated in 2020 prior to its 2025 lease expiration. A portion of the space (24.6% of sf) was re-leased to Five Below at a higher rent. The loan had an ARD in May 2023 with a final maturity date in November 2028.
- The servicer-reported occupancies and DSCs are: 37.4% / 1.50x (FY 2023), 37.4% / 2.10x (FY 2022), 37.4% / 1.30x (FY 2021), 12.8%; at closing, these were 100% / 2.23x. At this time, KBRA does not estimate a loss on this asset.
Pipeline Village East & West (5th largest, 5.5%, K-LOC, Underperform, REO)
- The collateral consists of a 132,181 sf retail center located in Hurst, Texas, approximately nine miles northeast of the Fort Worth CBD.
- KBRA maintains the loan's K-LOC designation and assigned a KPO of Underperform based on its REO status. The loan transferred to special servicing in August 2020 for imminent monetary default. The special servicer coordinated an uncontested non-judicial foreclosure with the borrower and the asset became REO in February 2022. The most recent servicer commentary indicates the property is not currently listed for sale. At issuance, Toys “R” Us and Babies “R” Us exposure represented 61.0% of the collateral square footage, on a combined basis. The privately held retail chain announced in March 2018 that it would close all of its roughly 880 Toys “R” Us and Babies “R” Us stores around the country. Two junior anchors, Petco and Party City, also vacated in 2018. Hobby Lobby signed a lease for 49,210 sf in 2019. As of December 2023, the property was 75.0% leased, compared to 60.1% at last review.
- The servicer-reported DSCs are: -0.09x (YTD September 2023), 0.72x (FY 2020), -0.21x (FY 2019); at closing it was 1.54x. An appraisal dated July 2023 valued the property at $11.7 million ($89 per sf), which is 30.8% below the $16.9 million ($128 per sf) value at issuance. As a result, the asset carries an ARA of $1.2 million, resulting in a cumulative ASER of $42,992. KBRA’s analysis resulted in an estimated loss of $1.9 million (20.2% estimated loss severity).
Rating Sensitivities
Future rating actions will be dependent upon the ongoing assessment of the timing and likelihood of ultimate payment of principal and accrued interest on the rated certificates. The assessment will consider the expected and actual losses on the remaining assets in the transaction, as well as, the magnitude and extent of interest shortfalls, if any, on the certificates.
To access rating and relevant documents, click here.