Press Release|CMBS
KBRA Affirms All Outstanding Ratings for WFCM 2013-LC12
1 May 2025 | New York
KBRA affirms all of its outstanding ratings for WFCM 2013-LC12, a $189.5 million CMBS conduit transaction. The affirmations reflect stability in our estimated losses for four of the five remaining assets since our last rating changes in December 2024. As of the April 2025 remittance period, three assets (83.5%) are specially serviced, including two non-performing matured balloon loans (42.0%), of which one (3.1%) is in foreclosure. The third specially serviced asset has a modified maturity date and remains current. One loan (3.6%), originally part of the Innsbrook Office Portfolio (7.3% of original pool balance), was released from the portfolio in March 2018 and now secures an individual loan which is, current with a final maturity in July 2043.
KBRA identified four K-LOCs (96.4%), including the specially serviced assets. The details of the K-LOCs are outlined below.
White Marsh Mall (largest, 41.5%, Specially Serviced)
- The loan is collateralized by a 702,317 sf portion of a 1.2 million sf regional mall located 12 miles north of downtown Baltimore. The mall has two non-collateral anchors, JCPenney and Macy's, and two collateral anchors, Macy's Home Store and Boscov's. The mall’s fourth anchor box formerly occupied by Sears (non-collateral), remains vacant since its store closure in 2020. The loan sponsor at closing was Brookfield Property Partners. In November 2024, Spinoso Realty Group (Spinoso) acquired the property via a receiver sale and assumed the loan.
- KBRA maintains the loan's K-LOC designation due to its status with the special servicer. In addition, financial performance has deteriorated since securitization, primarily driven by a decrease in base rents. As noted above, Spinoso acquired the property and assumed the loan in November 2024. A loan modification and extension agreement was executed with this loan assumption, which extended the loan's maturity to May 2027 and includes two one-year extension options if NOI thresholds are met. The loan will remain interest-only, and a lender-controlled cash management account will collect excess cash into a newly established all-purpose reserve. A total of $5.0 million was reserved in this account for tenant improvements, leasing commissions, and capital expenditures, with disbursements at the lender’s discretion. Any reserve funds exceeding $5.0 million at each quarter-end will be applied to the loan’s principal balance. Any existing reserves prior to the loan modification were consolidated into the all-purpose reserve. The qualified equity holder requirement was waived for the recourse guarantor, and permitted transfer language in the loan documents was modified to reflect new ownership.
- The servicer-reported occupancies and DSCs are: 86.0% / 1.46x (YTD June 2024), 93.0% / 1.60x (FY 2023), 87.0% / 1.76x (FY 2022); at closing these were 96.6% / 2.66x. An appraisal dated April 2024 valued the property at $80.0 million ($114 per sf), which is 73.3% below the $300.0 million ($427 per sf) value at issuance. As a result, the asset carries an ARA of $58.8 million, resulting in a cumulative ASER of $1.9 million. KBRA’s analysis resulted in an estimated loss of $107.7 million (57.7% estimated loss severity) on the whole loan balance of $186.8 million. The loss is based on a KBRA liquidation value of $79.4 million ($113 per sf). The value is based on a distressed non-stabilized disposition of the asset and takes into account comparable market values.
Carolina Place (2nd largest, 38.9%, K-LOC, Specially Serviced, Matured Non-Performing)
- The loan is collateralized by a 647,511 sf portion of a 1.2 million sf super-regional mall located in Pineville, North Carolina, approximately ten miles south of the Charlotte CBD. The mall is currently anchored by Belk, Dillard's, and JCPenney, of which only JCPenney (3.4% of total base rent) is collateral for the loan. JCPenney occupies its space subject to a lease expiring in May 2028. The previously vacant Sears store, which is loan collateral, is occupied by Southern Lion, a home décor market with over 100 tenants. The mall was also previously anchored by Macy's, which sold its store to the loan sponsor in 2017. The former Macy's store was subsequently leased to Dick's Sporting Goods. The loan sponsor is Brookfield Property Partners L.P.
- KBRA maintains the loan’s K-LOC designation due to its transfer to special servicing in May 2023 and subsequent maturity default in June 2023. In January 2024, the special servicer and borrower executed a forbearance agreement that expires in June 2025.
- For FY 2024, comparable in-line tenants with less than 10,000 sf generated sales of $461 per sf, representing a 12.3% increase from issuance ($411 per sf). The servicer-reported occupancies and DSCs are: 94.0% / 1.43x (YTD September 2024), 73.0% / 1.56x (FY 2023); at closing these were 94.0% / 1.71x. An appraisal dated September 2024 valued the property at $135.5 million ($209 per sf), which is 48.5% below the $263.0 million ($406 per sf) value at issuance. KBRA’s analysis resulted in an estimated loss of $22.7 million (32.6% estimated loss severity) on the whole loan balance of $143.6 million. The loss is based on a KBRA liquidation value of $98.8 million ($153 per sf). The value is derived from a direct capitalization approach using a KNCF of $12.8 million and a capitalization rate of 13.00%.
Queens Tower (3rd largest, 12.9%)
- The loan is collateralized by a 175,459 sf office property located in the Jamaica neighborhood of Queens, New York. The property’s largest tenant is NYC Department of Citywide Administrative Services, which leases 58.8% of the property’s square footage through November 2026.
- KBRA maintains the loan’s K-LOC designation due to the loan’s previous maturity default in 2023. The loan was subsequently modified and extended for 12 months through June 2024. The borrower exercised their one-year extension option extending their maturity through June 2025. The loan is currently on the master servicer’s watchlist for its upcoming maturity.
- According to the September 2024 rent roll, the property is 100% leased, up from 88.6% at last review. The increase in occupancy is a result of a new tenant, NYS OGS Education Department (2nd largest, 15.8% of total base rent) executing a lease in June 2024 through May 2034. The tenant occupies 18,500 sf (11.4% of the total sf).
- The servicer-reported occupancies and DSCs are: 100% / 2.32x (YTD September 2024), 88.6% / 2.14x (FY 2023), 89.0% / 2.12x (FY 2022); at closing these were 98.0% / 1.99x. KBRA's analysis resulted in an estimated loss given default of $692,988 (2.8% estimated loss severity). The loss is based on a KBRA liquidation value of $24.2 million ($138 per sf). The value is derived from a direct capitalization approach using a KNCF of $2.4 million and a capitalization rate of 10.00%.
Hotel Vetiver (6th largest, 3.1%, Specially Serviced, Foreclosure, Matured Non-Performing)
- The loan is collateralized by a 62-key limited-service hotel located in Long Island City, New York, approximately four miles east of Manhattan and eight miles north of downtown Brooklyn.
- KBRA maintains the loan’s K-LOC designation due to its foreclosure status. The loan was transferred to the special servicer in May 2020 due to delinquency and a receiver was put in place in November 2021. According to the special servicer, a new mortgage was found during foreclosure litigation, and the court ruled that this could be added to the complaint. Foreclosure litigation remains ongoing.
- The servicer-reported occupancies and DSCs are: N/A / -0.34x (YTD June 2023), N/A / -0.39x (FY 2022); at closing these were 85.0% / 1.80x. KBRA's analysis resulted in an estimated loss of $1.5 million (25.0% estimated loss severity). The loss is based on a KBRA liquidation value of $5.1 million ($81,935 per key) which is equal to 40.0% of the appraisal. The value considers a potentially protracted workout and difficulty in stabilizing the property.
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.