KBRA Affirms All Ratings for COMM 2013-CCRE7
26 Feb 2025 | New York
KBRA affirms all of its outstanding ratings for COMM 2013-CCRE7, a $76.2 million CMBS conduit transaction, which has two assets remaining in the underlying mortgage pool, both of which have been identified as K-LOCs. The affirmations follow a surveillance review of the transaction and are based on the performance and recovery analysis of the transaction's remaining two loans, which have not meaningfully changed since KBRA's last review in March 2024. In addition, the ratings reflect the likelihood of interest shortfalls reaching further in the capital structure as the special servicer works to resolve the loans.
As of the February 2025 remittance period, both of the remaining loans are outstanding beyond their initial scheduled maturities. Both loans are specially serviced: one loan (69.2%) is matured performing and the other (30.8%) is non-performing matured balloon. The details of the remaining loans are outlined below.
Lakeland Square Mall (69.2%, K-LOC, Underperform, Matured-Performing)
- The loan is collateralized by 535,937 sf of an 892,634 sf regional mall in Lakeland, Florida, approximately 35 miles east of Tampa and 50 miles southwest of Orlando. The sponsor of the loan is Brookfield Asset Management. The mall is anchored by Dillard’s, JC Penney, and Re-Sale America. Sears and Burlington Coat Factory were anchors but vacated. JCPenney serves as collateral for the loan, while the remaining anchors own their respective stores and the underlying land.
- KBRA maintains the loan’s K-LOC designation and KPO of Underperform based on its specially serviced status, failure to pay off at its April 2023 maturity date, and decrease in occupancy. The occupancy decline is due to Burlington Coat Factory vacating their 81,000-sf space at lease expiration in January 2023. Our analysis accounts for tenants Bath & Body Works, Cinemark, H&M, Tilly's, Victoria's Secret, Smart Carte, and Tilt paying percentage rents in lieu of base rents. The loan transferred to special servicing for maturity default during the May 2023 remittance period. According to the servicer, the borrower notified the lender that they no longer wish to retain ownership in the collateral property and want to assist with ownership transition. Foreclosure was initiated and a receiver has been appointed for the property. Lakeland Square Mall has a Green Street Tap Score of 9 and a Mall Grade of C, and has some competition within the subject’s primary trade area. The nearest retail centers include Eagle Ridge Mall (24 miles way, Grade C-), The Shops at Wiregrass (24 miles away, Grade B+), Brandon Exchange (24 miles away, Grade B+), Tampa Premium Outlets (26 miles away, Grade A-), and RITHM at Uptown (28 miles away, Grade B-).
- The servicer reported occupancies and DSCs are: 91.0% / 1.14x (YTD September 2024), 78.0% / 1.03x (FY 2023), 93.0% / 1.58x (FY 2022); these were 94.0% and 1.74x at issuance. An October 2024 appraisal valued the property at $48.6 million ($89 per sf), which represents a decline of 48.8% decline from the origination appraisal of $95.0 million ($174 per sf). KBRA’s analysis resulted in an estimated loss of $22.4 million (42.6% estimated loss severity) on the $52.7 million loan balance based on a liquidation value of $30.3 million ($56 per sf). The value is derived from a direct capitalization approach using a KNCF of $3.9 million and a capitalization rate of 13.00%.
20 Church Street (30.8%, K-LOC, Underperform, Matured Non-Performing)
- The loan is collateralized by a 404,015 sf, office tower located in the Hartford, Connecticut CBD. Constructed in 1981, the 23-story glass exterior building was acquired by the sponsor in 2006 for a reported $19.5 million ($47 per sf). Property amenities include concierge services, Wi-Fi capability, on-site property management, and a café/delicatessen with outdoor seating. The subject property has been constructed over a four-level subterranean parking garage that is owned and operated by the City of Hartford.
- KBRA maintains the loan's K-LOC designation and KPO of Underperform based on its specially serviced status, failure to pay off at its April 2023 maturity date, and decrease in occupancy. The occupancy decline is due to Care Centrix, Inc. downsizing their 49,294-sf footprint to 11,552 sf at lease expiration in December 2023. The loan was transferred to special servicer in April 2022 due to a payment default. Foreclosure was initiated and a receiver has been appointed for the property.
- The servicer reports occupancies and DSCs are: 78.0% /1.27x (YTD November 2023), 79.0% / 0.59x (FY 2022); these were 82.0% and 1.27x at issuance. A March 2023 appraisal valued the property at $17.4 million ($42 per sf), a decline of 50.3% from $35.0 million ($84 per sf) at issuance. KBRA’s analysis resulted in an estimated loss of $12.2 million (52.1% estimated loss severity) on the $23.5 million loan balance based on a liquidation value of $14.7 million ($35 per sf). The value is derived from a direct capitalization approach using a KNCF of $1.8 million and a capitalization rate of 9.50%, which was reduced by $4.1 million to account for downtime during the stabilization period.
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.