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WFRBS Commercial Mortgage Trust 2013-C14 -- Moody's affirms ten and downgrades four classes of WFRBS 2013-C14

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Rating Action: Moody's affirms ten and downgrades four classes of WFRBS 2013-C14Global Credit Research - 01 Feb 2021Approximately $1.12 billion of structured securities affectedNew York, February 01, 2021 -- Moody's Investors Service, ("Moody's") has affirmed the ratings on ten classes and downgraded the ratings on four classes in WFRBS Commercial Mortgage Trust 2013-C14 as follows:Cl. A-3, Affirmed Aaa (sf); previously on Jun 23, 2019 Affirmed Aaa (sf)Cl. A-4, Affirmed Aaa (sf); previously on Jun 23, 2019 Affirmed Aaa (sf)Cl. A-5, Affirmed Aaa (sf); previously on Jun 23, 2019 Affirmed Aaa (sf)Cl. A-3FL, Affirmed Aaa (sf); previously on Jun 23, 2019 Affirmed Aaa (sf)Cl. A-4FL, Affirmed Aaa (sf); previously on Jun 23, 2019 Affirmed Aaa (sf)Cl. A-3FX, Affirmed Aaa (sf); previously on Jun 23, 2019 Affirmed Aaa (sf)Cl. A-4FX, Affirmed Aaa (sf); previously on Jun 23, 2019 Affirmed Aaa (sf)Cl. A-S, Affirmed Aaa (sf); previously on Jun 23, 2019 Affirmed Aaa (sf)Cl. A-SB, Affirmed Aaa (sf); previously on Jun 23, 2019 Affirmed Aaa (sf)Cl. B, Downgraded to A2 (sf); previously on Jun 23, 2019 Affirmed Aa3 (sf)Cl. C, Downgraded to Baa3 (sf); previously on Jun 23, 2019 Affirmed A3 (sf)Cl. PEX**, Downgraded to A3 (sf); previously on Jun 23, 2019 Affirmed Aa3 (sf)Cl. X-A*, Affirmed Aaa (sf); previously on Jun 23, 2019 Affirmed Aaa (sf)Cl. X-B*, Downgraded to A2 (sf); previously on Jun 23, 2019 Affirmed Aa3 (sf)* Reflects interest-only classes** Reflects exchangable classRATINGS RATIONALEThe ratings on the P&I classes were affirmed due to their credit support and because the transaction's key metrics, including Moody's loan-to-value (LTV) ratio, Moody's stressed debt service coverage ratio (DSCR) and the transaction's Herfindahl Index (Herf), are within acceptable ranges.The ratings on two P&I classes, Cl. B and Cl. C, were downgraded due to a decline in pool performance and higher anticipated losses from specially serviced loans. Specially serviced loans now represent nearly 12% of the pool. The largest specially serviced loan is the White Marsh Mall (8.5% of the pool), secured by a regional mall which was exhibiting a decline in performance prior to 2020. Furthermore, occupancy has declined at properties backing two large non-specially serviced loans in the pool, including The Plant at San Jose (9.5%), secured by a power center in San Jose, CA and 301 South College Street (6.6%), secured by an office building in Charlotte, NC in which the largest tenant announced a significant upcoming downsizing.The rating on the IO class X-A was affirmed based on the credit quality of its referenced classes.The rating on the IO Class X-B was downgraded due to a decline in the credit quality of its referenced class.The rating on class PEX was downgraded due to a decline in the credit quality of the referenced exchangeable classes.The coronavirus outbreak, the government measures put in place to contain it, and the weak global economic outlook continue to disrupt economies and credit markets across sectors and regions. Our analysis has considered the effect on the performance of commercial real estate from the current weak US economic activity and a gradual recovery for the coming months. Although an economic recovery is underway, it is tenuous and its continuation will be closely tied to containment of the virus. As a result, the degree of uncertainty around our forecasts is unusually high. Stress on commercial real estate properties will be most directly stemming from declines in hotel occupancies (particularly related to conference or other group attendance) and declines in foot traffic and sales for non-essential items at retail properties.We regard the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety.Moody's rating action reflects a base expected loss of 9.2% of the current pooled balance, compared to 4.2% at Moody's last review. Moody's base expected loss plus realized losses is now 8.1% of the original pooled balance, compared to 3.8% at the last review. Moody's provides a current list of base expected losses for conduit and fusion CMBS transactions on moodys.com at http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF215255.FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSThe performance expectations for a given variable indicate Moody's forward-looking view of the likely range of performance over the medium term. Performance that falls outside the given range can indicate that the collateral's credit quality is stronger or weaker than Moody's had previously expected.Factors that could lead to an upgrade of the ratings include a significant amount of loan paydowns or amortization, an increase in the pool's share of defeasance or an improvement in pool performance.Factors that could lead to a downgrade of the ratings include a decline in the performance of the pool, loan concentration, an increase in realized and expected losses from specially serviced and troubled loans or interest shortfalls.METHODOLOGY UNDERLYING THE RATING ACTION The methodologies used in rating all classes except exchangeable classes and interest-only classes were "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in September 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1244778 and "Moody's Approach to Rating Large Loan and Single Asset/Single Borrower CMBS" published in September 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1190579. The principal methodology used in rating exchangeable classes was "Moody's Approach to Rating Repackaged Securities" published in June 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1230078. The methodologies used in rating interest-only classes were "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in September 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1244778, "Moody's Approach to Rating Large Loan and Single Asset/Single Borrower CMBS" published in September 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1190579 and "Moody's Approach to Rating Structured Finance Interest-Only (IO) Securities" published in February 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1111179. Please see the list of ratings at the top of this announcement to identify which classes are interest-only (indicated by the *) and exchangeable classes (indicated by the **). Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies. DEAL PERFORMANCEAs of the January 15, 2021 distribution date, the transaction's aggregate certificate balance has decreased by 12% to $1.29 billion from $1.47 billion at securitization. The certificates are collateralized by 67 mortgage loans ranging in size from less than 1% to 9.6% of the pool, with the top ten loans (excluding defeasance) constituting 66.4% of the pool. Eighteen loans, constituting 9.2% of the pool, have defeased and are secured by US government securities.Moody's uses a variation of Herf to measure the diversity of loan sizes, where a higher number represents greater diversity. Loan concentration has an important bearing on potential rating volatility, including the risk of multiple notch downgrades under adverse circumstances. The credit neutral Herf score is 40. The pool has a Herf of 16, compared to 17 at Moody's last review.As of the January 2021 remittance report, loans representing 88% were current or within their grace period on their debt service payments, 9% were between 30 -- 59 days delinquent, 2% were between 60 -- 89 days delinquent and 1% was REO.Eleven loans, constituting 18.3% of the pool, are on the master servicer's watchlist, of which no loans have yet received loan modifications in relation to the coronavirus impact on the property. The watchlist includes loans that meet certain portfolio review guidelines established as part of the CRE Finance Council (CREFC) monthly reporting package. As part of Moody's ongoing monitoring of a transaction, the agency reviews the watchlist to assess which loans have material issues that could affect performance.One loan has been liquidated from the pool, resulting in an aggregate realized loss of $125,268 (for an average loss severity of less than 1%). Four loans, constituting 11.6% of the pool, are currently in special servicing. Three of the specially serviced loans, representing 11% of the pool, have transferred to special servicing since March 2020.The largest specially serviced loan is the White Marsh Mall Loan ($110.0 million -- 8.5% of the pool), which represents a pari-passu portion of a $190.0 million mortgage loan. The loan is secured by an approximately 700,000 square feet (SF) component of a 1.2 million SF super-regional mall located in Baltimore, Maryland. The mall is anchored by Macy's, JC Penney, Boscov's, and Macy's Home Store. Macy's is not part of the loan collateral and Sears, a former non-collateral anchor closed in April 2020. As of June 2020, inline and collateral occupancy were 89% and 93%, respectively, compared to 92% and 95% in September 2019. Property performance declined in 2019 due to lower rental revenues and increased inline vacancy, and the 2019 year-end net operating income (NOI) was approximately 8% lower than underwritten levels. The loan transferred to special servicing in August 2020 due to imminent monetary default and is paid through its November 2020 payment date. A pre-negotiation letter has been executed and discussions with the borrower are ongoing. The loan is interest-only throughout its entire term.The second largest specially serviced loan is the Mobile Festival Centre Loan ($18.4 million -- 1.4% of the pool), which is secured by a 380,619 SF retail power center located in Mobile, Alabama. The property was 48% leased as of September 2020, down from 72% in 2018 and 80% at securitization. Recent tenant departures include Bed Bath & Beyond (7% of net rentable area (NRA)), Virginia College (16%) and Ross Dress for Less (8%). The loan transferred to special servicing in September 2020 due to imminent monetary default as a result of the pandemic and the special servicer is reviewing the borrower's request for relief. The loan has amortized by 11% and is paid through October 2020.The third largest specially serviced loan is the 808 Broadway Loan ($12.5 million -- 1.0% of the pool), which is secured by a 24,548 SF retail space located on Broadway and East 11 Street in New York, New York. It is the ground floor retail condo space of a six story building constructed in 1888. The servicer has not received any quarterly or annual financial statements or rent rolls since March 2019. The loan transferred to special servicing in November 2020 due to imminent monetary default as a result of the pandemic and is paid through October 2020. The borrower has indicated the single retail tenant has filed for chapter 11 bankruptcy protection and will no longer be paying rent. The special servicer is evaluating the loan and collateral in order to recommend the most appropriate course of action.The remaining specially serviced loan is secured by two limited service hotel properties located in Texas totaling 144 rooms. The loan transferred to special servicing in March 2016 due to imminent monetary default following a drop in performance. The loan is REO. Moody's has also assumed a high probability of default for one poorly performing loan, constituting 0.8% of the pool, which is secured by a mixed-use property in Bethesda, Maryland. Moody's has estimated an aggregate loss of $58 million (a 36% expected loss on average) from these specially serviced and troubled loans.The credit risk of loans is determined primarily by two factors: 1) Moody's assessment of the probability of default, which is largely driven by each loan's DSCR, and 2) Moody's assessment of the severity of loss upon a default, which is largely driven by each loan's loan-to-value ratio, referred to as the Moody's LTV or MLTV. As described in the CMBS methodology used to rate this transaction, we make various adjustments to the MLTV. We adjust the MLTV for each loan using a value that reflects capitalization (cap) rates that are between our sustainable cap rates and market cap rates. We also use an adjusted loan balance that reflects each loan's amortization profile. The MLTV reported in this publication reflects the MLTV before the adjustments described in the methodology.Moody's received full year 2019 operating results for 100% of the pool, and partial year 2020 operating results for 98% of the pool (excluding specially serviced and defeased loans). Moody's weighted average conduit LTV is 104%, compared to 97% at Moody's last review. Moody's conduit component excludes loans with structured credit assessments, defeased and CTL loans, and specially serviced and troubled loans. Moody's net cash flow (NCF) reflects a weighted average haircut of 22% to the most recently available net operating income (NOI). Moody's value reflects a weighted average capitalization rate of 9.7%.Moody's actual and stressed conduit DSCRs are 1.76X and 1.04X, respectively, compared to 1.99X and 1.13X at the last review. Moody's actual DSCR is based on Moody's NCF and the loan's actual debt service. Moody's stressed DSCR is based on Moody's NCF and a 9.25% stress rate the agency applied to the loan balance.The top three conduit loans represent 28.2% of the pool balance. The largest loan is the Midtown I & II Loan ($124.3 million -- 9.6% of the pool). The loan is secured by two Class A office buildings totaling 794,110 SF and an adjacent parking deck located in Atlanta, Georgia. The buildings are 100% leased to AT&T Corporation through April 2024. The loan is interest only for its entire term and matures in May 2023. Due to the single tenant risk, Moody's incorporated a lit/dark analysis. The loan is interest only for the entire 10-year term and Moody's LTV and stressed DSCR are 111% and 1.09X, respectively, the same as the last review.The second largest loan is The Plant San Jose Loan ($123.0 million -- 9.5% of the pool), which is secured by a 486,000 SF component of a 624,000 SF power center located in San Jose, California approximately two miles south of the San Jose CBD. The property is anchored by a Home Depot (29% of NRA; lease expiration January 2034), Best Buy (9% of NRA; lease expiration January 2023) and Ross Dress for Less (5% of NRA; lease expiration January 2024). The property is also shadow anchored by Target. The property was 79% leased as of September 2020 compared to 89% in December 2017 and 96% at securitization. The decline in occupancy was partly driven by Toys R Us, (13% of the collateral NRA) vacating as part of their bankruptcy in early 2018. Operating expenses have also increased significantly in recent years compared with underwritten levels. The loan is interest only for the entire 10-year term. Moody's LTV and stressed DSCR are 129% and 0.75X, respectively, compared to 99% and 0.96X at the last review.The third largest loan is the RHP Portfolio III Loan ($117.3 million -- 9.1% of the pool), which is secured by a portfolio of 12 manufactured housing communities totaling 3,321 pads. The properties are located in five states: Florida, Utah, New York, Missouri and Kansas. The portfolio has experienced stable occupancy since 2010 and was 89% leased as of December 2019. The loan has amortized by almost 9% since securitization and Moody's LTV and stressed DSCR are 101% and 0.96X, respectively, compared to 109% and 0.90X at the last review.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.The analysis includes an assessment of collateral characteristics and performance to determine the expected collateral loss or a range of expected collateral losses or cash flows to the rated instruments. As a second step, Moody's estimates expected collateral losses or cash flows using a quantitative tool that takes into account credit enhancement, loss allocation and other structural features, to derive the expected loss for each rated instrument.Moody's did not use any stress scenario simulations in its analysis.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.At least one ESG consideration was material to the credit rating action(s) announced and described above.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com. . Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Fred Kasimov Associate Lead Analyst Structured Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Romina Padhi VP - Senior Credit Officer Structured Finance Group JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 © 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. 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