CHICAGO--(BUSINESS WIRE)--Fitch Ratings has issued a presale report on WFRBS 2013-C12 Commercial Mortgage Trust Pass-Through Certificates.
Fitch expects to rate the transaction and assign Rating Outlooks as follows:
--$63,911,000 Class A-1 'AAAsf'; Outlook Stable;
--$142,980,000 Class A-2 'AAAsf'; Outlook Stable;
--$165,000,000 Class A-3 'AAAsf'; Outlook Stable;
--$298,198,000 Class A-4 'AAAsf'; Outlook Stable;
--$101,955,000 Class A-SB 'AAAsf'; Outlook Stable;
--$90,000,000#a Class A-3FL 'AAAsf'; Outlook Stable;
--$0 Class A-3FXa 'AAAsf'; Outlook Stable;
--$120,070,000 Class A-S 'AAAsf'; Outlook Stable;
--$982,114,000a* Class X-A 'AAAsf'; Outlook Stable;
--$126,228,000a* Class X-B 'A-sf'; Outlook Stable;
--$75,429,000 Class B 'AA-sf'; Outlook Stable;
--$50,799,000 Class C 'A-sf'; Outlook Stable;
--$41,563,000a Class D 'BBB-sf'; Outlook Stable;
--$27,709,000a Class E 'BBsf'; Outlook Stable;
--$16,933,000a Class F 'Bsf'; Outlook Stable.
*Notional amount and interest-only.
a Privately placed pursuant to Rule 144A.
The expected ratings are based on information provided by the issuer as of Feb. 19, 2013. Fitch does not expect to rate the $81,587,114 interest-only Class X-C or the $36,945,114 Class G.
The certificates represent the beneficial ownership in the trust, primary assets of which are 100 loans secured by 138 commercial properties having an aggregate principal balance of approximately $1.231 billion as of the cutoff date. The loans were contributed to the trust by The Royal Bank of Scotland; Wells Fargo Bank, National Association; Liberty Island Group I LLC; C-III Commercial Mortgage LLC; Basis Real Estate Capital II, LLC; and NCB, FSB.
Fitch reviewed a comprehensive sample of the transaction's collateral, including site inspections on 73.9% of the properties by balance, cash flow analysis of 76.9%, and asset summary reviews on 89.7% of the pool.
Key Rating Drivers
Fitch Leverage: The Fitch debt service coverage ratio (DSCR) of 1.44x is better than the average 2012 DSCR of 1.24x. However, the Fitch loan to value (LTV) of 98.5% is slightly worse than the 2012 average LTV of 97.2%. Excluding the loans collateralized by co-operative housing (co-op) properties (4.53% of the pool), the Fitch DSCR and LTV are 1.33x and 101.4%, respectively.
Less Amortization and Interest-Only Loans: The scheduled amortization for the entire transaction is 13.4%, which is lower than most recent transactions. Of note, 26.9% of the pool consists of interest-only loans, and 28.7% are partial interest-only loans, prior to amortizing. In addition, five of the top 10 loans are full-term interest-only.
Single-Tenant Exposure: Four of the top 10 loans are secured by properties 100% occupied by a single tenant. Top 10 loans with single-tenant concentrations include Merrill Lynch Office, Hensley & Co. Portfolio, Las Vegas Strip Walgreens, and Kraft - Three Lakes Drive.
Loan Concentration: The pool is considered to be moderately concentrated. The largest 10 loans account for 52.5% of the transaction, compared to the average 2011 and 2012 top 10 loan concentrations of 59.9% and 54.2%, respectively. In addition, the largest three loans account for 27.3% of the pool.
For this transaction, Fitch's net cash flow (NCF) was 9.6% below the full-year 2011 net operating income (NOI) (for properties that 2011 NOI was provided, excluding properties that were stabilizing during this period). Unanticipated further declines in property-level NCF could result in higher defaults and loss severity on defaulted loans, and could result in potential rating actions on the certificates. Fitch evaluated the sensitivity of the ratings assigned to WFRBS 2013-C12 certificates and found that the transaction displays average sensitivity to further declines in NCF. In a scenario in which NCF declined a further 20% from Fitch's NCF, a downgrade of the junior 'AAAsf' certificates to 'Asf' could result. In a more severe scenario, in which NCF declined a further 30% from Fitch's NCF, a downgrade of the junior 'AAAsf' certificates to 'BBB+sf' could result. The presale report includes a detailed explanation of additional stresses and sensitivities on pages 77 - 78.
The Master Servicers will be Wells Fargo Bank, N.A. and NCB, FSB, rated 'CMS2' and 'CMS2-', respectively by Fitch. The special servicers will be Rialto Capital Advisors, LLC and NCB, FSB rated 'CSS2-' and 'CSS3+', respectively, by Fitch.
The presale report is available at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--Criteria for Analyzing Multiborrower U.S. Commercial Mortgage Transactions (August 2012)
--Global Structured Finance Rating Criteria (June 2012)
--Criteria for Special-Purpose Vehicles in Structured Finance Transactions (May 2012)
--U.S. Commercial Mortgage Servicer Rating Criteria (February 2011)
--U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (December 2012)
--Counterparty Criteria for Structured Finance Transactions (May 2012)
Applicable Criteria and Related Research WFRBS Commercial Mortgage Trust 2013-C12 (US CMBS)
Counterparty Criteria for Structured Finance Transactions
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
U.S. Commercial Mortgage Servicer Rating Criteria
Criteria for Special-Purpose Vehicles in Structured Finance Transactions
Global Structured Finance Rating Criteria
Criteria for Analyzing Multiborrower U.S. Commercial Mortgage Transactions