KBRA Affirms All Ratings for MSBAM 2013-C12
7 Feb 2025 | New York
KBRA affirms all ratings for MSBAM 2013-C12, a $152.2 million CMBS conduit transaction which has four assets remaining in the mortgage pool, each of which have been identified as K-LOCs. The affirmations follow a surveillance review of the transaction and are based on the performance and expected recovery of the transaction's remaining four loans, which have not meaningfully changed since KBRA's last ratings change in February 2024. In addition, the realized losses from two assets liquidated in January 2025 were in line with KBRA's projected loss amounts at the time of the last ratings change. The liquidated assets with realized losses were Deer Springs Town Center ($25.1 million loan, 27.6% loss severity) and Winter Haven Citi Centre ($11.2 million loan, 33.0% loss severity). As of the January 2025 remittance period, two of the four remaining assets have a matured non-performing balloon status (73.8% of the pool balance), while one asset (3.5%) is REO. The details of the loans are outlined below.
15 MetroTech Center (largest, 42.3%, K-LOC, Underperform, Matured Non-Performing Balloon)
- The loan is collateralized by a 649,492 sf, Class-A office building located in downtown Brooklyn, New York. The 19-story property was built in 2003 and offers 243 parking spaces in a below-grade parking garage. The borrower ground leases the land from the City of New York pursuant to a 99-year ground lease that expires in December 2100.
- KBRA maintains the loan's K-LOC designation and KPO of Underperform due to its transfer to special servicing in July 2023 and its subsequent maturity default in September 2023. The loan status was updated to matured non-performing as of January 2024. The property has suffered from declining occupancy and increased expenses, including a ground lease rental rate increase in 2023. In addition, the subject's largest tenant, CoNY Human Resources (29.1% of sf) is operating on a MTM basis following its July 2024 lease expiration. The servicer has noted that renewal discussions between the landlord and tenant are ongoing.
- The servicer-reported occupancies and DSCs are: 70.0% / 0.97x (YTD September 2023), 75.0% / 0.81x (FY 2022); at closing these were 97.8% / 1.42x. The subject was reappraised for $144.6 million ($223 per sf) in July 2024, a 47.0% decline from $273.0 million ($423 per sf) at issuance. KBRA 's analysis resulted in an estimated loss of $7.9 million on a whole loan balance of $121.6 million (6.5% estimated loss severity). The loss is based on a distressed liquidation value of $115.8 million ($178 per sf).
Westfield Countryside (2nd largest, 31.5%, K-LOC, Underperform, Matured Non-Performing Balloon)
- The loan is collateralized by a 1.3 million sf, regional mall located in Clearwater, Florida, in the North Pinellas submarket, approximately 25 miles west of the Tampa CBD. Dillard's, JC Penney, Macy's and Whole Foods all serve as non-collateral anchors.
- KBRA maintains the loan's K-LOC designation and KPO of Underperform based on its matured non-performing status with the special servicer following its failure to pay off at the June 2023 maturity date. The subject has previously suffered a decline in performance due to fluctuating occupancy and exposure to financially distressed tenants. In addition, inclusive of MTM leases, leases generating 35.5% of base rent are scheduled to expire through YE 2025. The servicer recently reported that the borrower is in the process of seeking a sale and assumption of the loan.
- The servicer-reported occupancies and DSCs are: 93.0% / 1.08x ( YTD September 2024), 71.0% / 1.05x (FY 2023), 81.0% / 0.98x (FY 2022); at closing these were 91.7% / 1.66x. The subject was reappraised for $116.0 million ($250 per sf) in October 2023, a 57.0% decline from $270.0 million ($581 per sf) at issuance. KBRA 's analysis resulted in an estimated loss of $57.3 million on a whole loan balance of $135.2 million (42.4% estimated loss severity). The loss is based on a distressed liquidation value of $80.8 million ($174 per sf).
385 Fifth Avenue (3rd largest, 20.9%, K-LOC, Underperform, Current, Watchlist)
- The loan is collateralized by a 102,219 sf, 18-story Class-B office building located in the Murray Hill submarket of New York City, less than a mile from Midtown Manhattan. The property, which is known as the “Accessory Center” is operated primarily as a showroom, as majority of the tenants cater to buyers in the women's accessories and jewelry industries.
- KBRA maintains the loan's K-LOC designation and KPO of Underperform based on prior special servicing and a loan modification in November 2023, which extended the loan's maturity until June 2025. The loan was returned to the master servicer following the modification. The property previously suffered a decline in occupancy after WeWork (21.0% of sf) vacated the subject in 2023. Several new tenants have backfilled the space, bringing physical occupancy to 95.2%, according to the September 2024 rent roll. However, performance is still down from closing due to declining base rent and expense recoveries.
- The servicer-reported occupancies and DSCs are: 95.0% / 0.85x (YTD September 2024), 95.0% / 1.31x (FY 2022); at closing these were 99.4% / 1.31x. The subject was reappraised for $37.7 million ($369 per sf) in June 2023, a 31.4% decline from $55.0 million ($538 per sf) at issuance. KBRA's analysis resulted in an estimated loss of $4.5 million on a whole loan balance of $31.9 million (14.0% estimated loss severity). The loss is based on a distressed liquidation value of $27.4 million ($268 per sf).
Hermitage Crossing (4th largest, 3.5%, K-LOC, Underperform, REO)
- The asset is a a 51,631 sf neighborhood retail center located in Hermitage, Pennsylvania.
- KBRA maintains the asset's K-LOC designation and KPO of Underperform based on its REO status. The asset became REO in September 2024 following a foreclosure sale.
- The subject was reappraised for $4.6 million ($90 per sf) in October 2024, a 48.6% decline from $9.0 million ($174 per sf) at issuance. KBRA's analysis resulted in an estimated loss of $1.6 million on a whole loan balance of $5.3 million (30.7% 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 ratings and relevant documents, click here.