KBRA Downgrades Two Ratings and Affirms All Other Ratings for WFRBS 2013-C15
8 Apr 2025 | New York
KBRA downgrades the ratings of two classes of certificates and affirms all other outstanding ratings of WFRBS 2013-C15, a $180.1 million CMBS conduit transaction. The rating actions are driven by an increase in KBRA's estimated losses for two (97.3% of the pool balance) assets while also considering the likelihood of an increase in interest shortfalls reaching higher in the capital structure as the servicer works through the resolution of the remaining assets.
As of the March 2025 remittance period, the transaction has four remaining assets, including one (38.7%) specially serviced asset and one loan (1.4%) that is defeased. KBRA identified two K-LOCs (97.3%), including the specially serviced asset. The details of the K-LOCs are outlined below.
Augusta Mall (largest, 58.6%, K-LOC, Modification)
- The loan is collateralized by a 500,222 sf, super-regional mall located in Augusta, Georgia. Mall anchors include Dick's Sporting Goods, Dillard’s, JCPenney, and Macy’s, all of which own their respective improvements and land with the exception of Dick's Sporting Goods (3.5% of total base rent), which occupies its space subject to a lease expiring in January 2028. Sears previously served as a non-collateral anchor but closed in April 2020. The former Sears space remains vacant. The loan sponsor is Brookfield Property Partners L.P.
- KBRA maintains the loan’s K-LOC designation and its KPO of Underperform due to its prior status with the special servicer and elevated refinance risk. The loan transferred to special servicing in August 2023 due to maturity default and ongoing performance concerns. The borrower and special servicer executed a modification in July 2022 that included a maturity extension through August 2025, with an option to extend the loan through August 2026 if DSC is greater than 1.50x among other conditions. The loan returned to the master servicer in January 2025 and is currently with the master servicer. However, in this transaction, the loan is reported as REO.
- For the TTM period ended January 2025, comparable in-line tenants with less than 10,000 sf (excluding Apple) generated sales of $532 per sf, representing a 31.1% increase from issuance ($406 per sf). The servicer-reported occupancies and DSCs are: 97.0% / 3.23x (YTD September 2024), 91.0% / 3.20x (FY 2023); at closing these were 98.0% / 2.25x. As of March 2025, the loan is current on payments and not specially serviced. However, in the event of a default, KBRA estimates that the loan could experience a loss given default of $37.6 million (35.6% estimated loss severity) on the whole loan balance of $163.0 million. The loss is based on a KBRA liquidation value of $105.7 million ($211 per sf). The value is derived from a direct capitalization approach using a KNCF of $12.7 million and a capitalization rate of 12.00%
Carolina Place (second largest, 38.7%, 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 and its KPO of Underperform 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 (32.5% 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%.
The remaining non-defeased loan accounts for 1.4% of the pool balance.
Halsted Village (third largest, 1.4%)
- The loan is collateralized by a 137,801-sf anchored retail center in Farmington Hills, MI, approximately 25 miles northwest of the Detroit CBD. KBRA maintains a KPO of Perform for the loan based on stable collateral performance. The anchor tenant at the property is Kroger, occupying 44% of the total GLA pursuant to a lease expiring August 2031. The loan is scheduled to mature in August 2028 and fully amortizes over the 15-year loan term.
Details concerning the classes with ratings changes are as follows:
- Class C to CCC (sf) from B- (sf)
- Class PEX to CCC (sf) from B- (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
- CMBS: North American CMBS Single Borrower & Large Loan Rating Methodology
- CMBS: North American CMBS Property Evaluation Methodology
- Structured Finance: Global Structured Finance Counterparty Methodology
- CMBS: Methodology for Rating Interest-Only Certificates in CMBS Transactions
- ESG Global Rating Methodology