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KBRA Downgrades Four Ratings and Affirms One Rating for WFRBS 2012-C10

2 Jan 2026   |   New York

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KBRA downgrades the ratings of four classes of certificates and affirms one rating for WFRBS 2012-C10, a $216.7 million CMBS conduit transaction. The ratings actions follow a surveillance review of the transaction, which has exhibited an increase in estimated losses since KBRA's last ratings change in January 2023. The ratings also account for the likelihood of interest shortfalls continuing and affecting classes higher in the capital structure while the servicer resolves the transaction’s specially serviced assets.

As of the December 2025 remittance period, three loans remain in the pool, including two specially serviced assets (52.6% of the pool balance). KBRA identified each of the remaining assets as K-LOCs, all of which have estimated losses. The details of the three assets are outlined below.

Republic Plaza (largest, 47.4%, Watchlist)

  • The loan is collateralized by a 1.3 million sf, Class-A office tower located in the Denver, Colorado CBD. The asset has 48,000 sf of retail space, two levels of below-grade parking and a 12-story parking garage with 1,275 stalls. Brookfield Office Properties Inc. is the loan sponsor. The property was built in 1982 and renovated in 2002.
  • KBRA maintains the loan's K-LOC designation based on its failure to pay off at its December 2022 maturity. The loan was transferred to the special servicer in March 2023 for maturity default but was returned to the master servicer in September 2023 following a modification. The terms of the modification included an extension of the loan's maturity date to March 2026, a principal curtailment of $6.0 million, and the implementation of a cash trap that remains in effect for the purpose of applying excess cash flow over $400,000 as principal curtailments.
  • Based one the June 2025 rent roll, the property was 69.2% leased, a decrease from 72.7% at the last review and 94.5% at issuance. The decline in occupancy since issuance is primarily attributed to several former top 10 tenants vacating upon lease expiration, as well as Ovintiv (formerly Encana Oil & Gas), the largest tenant representing 21.0% of total base rent and 15.9% of collateral sf, reducing its leased space to 213,240 sf from 239,732 sf. According to the servicer, the tenant no longer holds any rights to further reduce its leased premises. The servicer also noted that the borrower is in preliminary discussions with a prospective tenant for approximately 30,000 sf. The borrower continues to pursue lease renewals and new prospects to improve occupancy ahead of the extended maturity in March 2026.
  • The servicer-reported occupancies and DSCs are: 68.0% / 1.16x (YTD September 2025), 65.2% / 1.60x (FY 2024), 67.3%/ 1.16x (FY 2023); at closing, these were 94.0% / 1.55x. An appraisal dated December 2022 valued the asset at $298.1 million ($229 per sf), which is 44.3% below the $535.4 million ($411 per sf) value at issuance. As of December 2025, the loan is current on payments and is not specially serviced. However, in the event of another default, KBRA estimates that the loan could experience a loss given default of $128.5 million (55.9% estimated loss severity) on the whole loan balance of $230.1 million. The loss is based on a KBRA liquidation value of $104.8 million ($80 per sf). The value considers a distressed non-stabilized disposition of the asset.

Dayton Mall (2nd largest, 32.2%, Specially Serviced, Matured Non-Performing)

  • The loan is collateralized by a 778,487 sf portion of a 1.4 million sf regional mall located in Dayton, Ohio, approximately 10 miles south of the city’s CBD. The mall was formerly anchored by non-collateral tenants Elder Beerman and Sears. Elder Beerman closed in October 2018 (the space was sold in April 2025 to an affiliate of Industrial Commercial Properties, which has not indicated plans for future use) and Sears closed in November 2018 (the space was sold to and redeveloped by Crossroads Church, which is now open). Anchors JCPenney (22.6% of collateral sf, March 2026 lease expiration) and Macy's (non-collateral) remain open. Dayton Mall has a Green Street Mall Grade of B- and has competition within the subject’s primary trade area. Competing retail centers include The Greene Town Center (seven miles way, Grade B+), Mall at Fairfield Commons (12 miles away, Grade B-), Cincinnati Premium Outlets (15 miles away, Grade A-), Kenwood Towne Center (31 miles away, Grade A+), and Destination Outlets (33 miles away, Grade C).
  • KBRA maintains the loan's K-LOC designation due to its status with the special servicer. The loan transferred to special servicing in July 2021 following the bankruptcy filing of the former loan sponsor, Washington Prime Group. In December 2021, the court appointed Spinoso Real Estate Group as receiver. The loan defaulted at maturity in September 2022. In October 2025, the property was sold to an affiliate of Hull Property Group for $37.0 million ($48 per sf) and the loan was assumed. November 2025 special servicer commentary stated that, barring any new defaults, the loan is expected to be returned to the master servicer as a corrected mortgage loan in January 2026.
  • Pursuant to the June 2025 rent roll, the collateral was 84.9% leased, compared to 90.6% at last review and 92.2% at closing. Leases comprising 46.2% of base rents, inclusive of MTM leases, are scheduled to expire through FY 2026. For the TTM period ended May 2025, sales for comparable in-line tenants occupying less than 10,000 sf totaled $263 per sf, compared to $324 per sf at last review and $315 per sf at closing.
  • The most recent servicer-reported occupancies and DSCs are: 85.0% / 0.52x (TTM June 2025), 90.0% / 0.61x (FY 2024); at securitization these were 92.0% / 1.88x. An appraisal dated July 2025 valued the property at $29.9 million ($38 per sf), which represents a 77.3% decline compared to the issuance appraisal of $132.0 million ($170 per sf). The asset carries an ARA of $52.1 million, resulting in a cumulative ASER of $3.3 million. KBRA’s analysis resulted in an estimated loss of $53.8 million (77.2% estimated loss severity) on the $69.7 million loan balance. The loss is based on a KBRA liquidation value of $21.5 million ($28 per sf). The value is derived from a direct capitalization approach using a KNCF of $2.8 million and a capitalization rate of 13.00%.

Rogue Valley Mall (3rd largest, 20.4%, Specially Serviced)

  • The loan is collateralized by a 453,935 sf portion of a 640,294 sf regional mall located in Medford, Oregon, approximately 100 miles south of Eugene, Oregon and 25 miles north of the California border. The mall has four anchors, JCPenney, Macy’s, Macy’s Home Store, and Kohl’s, all of which remain open. Macy’s and Kohl’s own their stores and underlying land. The loan sponsor is Brixton Capital, which purchased the property from former sponsor GGP in 2016 for $61.5 million ($135 per sf). Rogue Valley Mall has a Green Street Mall Grade of C and has little competition within the subject’s primary trade area.
  • KBRA maintains the loan’s K-LOC designation due to its status with the special servicer. The borrower was unable to pay off the loan at its October 2022 maturity and it subsequently transferred to the special servicer. The borrower agreed to cooperate in a joint receivership motion and a receivership sale is in process. JLL is marketing the asset.
  • According to the June 2025 rent roll, the collateral was 83.3% leased, compared to 89.7% at last review and 94.8% at closing. Lease rollover through YE 2026, inclusive of MTM leases, represents 41.9% of base rent; however, the largest tenant expiring during this period represents only 2.0% of base rent. For the TTM period ended May 2025, sales for comparable in-line tenants occupying less than 10,000 sf were $312 per sf, compared to $311 per sf at last review, and $321 per sf at closing.
  • The servicer-reported occupancies and DSCs are: 85.0% / 0.89x (TTM March 2025), 88.0% / 1.29x (TTM September 2024); at closing these were 95.0% / 1.76x. An appraisal dated July 2025 valued the property at $19.5 million ($43 per sf), which represents a 75.6% decline compared to the issuance appraisal of $80.0 million ($176 per sf). The asset carries an ARA of $26.2 million. KBRA’s analysis resulted in an estimated loss of $26.5 million (60.0% estimated loss severity) on the $44.3 million loan balance. KBRA applied a capitalization rate of 13.50% to the stabilized KNCF, resulting in a value of $16.8 million. KBRA adjusted this value downward by $1.7 million to account for income lost during the stabilization period. KBRA's adjusted value is $15.2 million ($33 per sf).

Details concerning the classes with ratings changes are as follows:

  • Class B to A- (sf) from AA- (sf)
  • Class C to CCC (sf) from BB (sf)
  • Class D to CC (sf) from CCC (sf)
  • Class E to C (sf) from CC (sf)

Details concerning the ratings affirmation are as follows:

  • Class F at C (sf)

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.

Related Publication

Methodologies

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1012820