Fitch Affirms Wells Fargo Commercial Mortgage Trust 2013-LC12 Certificates

CHICAGO--()--Fitch Ratings has affirmed 16 classes of WFCM Commercial Mortgage Trust 2013-LC12 certificates due to stable performance since issuance. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations are based on the stable performance of the underlying collateral pool. As of the June distribution, the pool's aggregate principal balance has been paid down by 1.48% to $1.39 billion from $1.41 billion at issuance. Based on the annualized and full year 2014 reported net operating income (NOI) of the 98.8% of the pool that reported, the pool's overall NOI has improved 7% since issuance.

There are currently no delinquent or specially serviced loans; four loans are on the servicer watchlist (1.7%). Two of the properties on the watchlist are encountering occupancy issues that were anticipated at issuance and represent minimal asset risk. Two additional loans (12%) are Fitch loans of concern.

The largest Fitch loan of concern, Carolina Place (6.5% of the pool), is a 1.2 million square foot regional mall located 10 miles southwest of the Charlotte CBD. The loan is sponsored by a joint venture between General Growth Properties and the New York State Common Retirement Fund. The mall has undergone two rounds of redevelopment in less than 10 years and is the dominant property in the South Charlotte/North Rock Hill trade area. A newly constructed property by Simon Properties and Taubman, Carolina Premium Outlets, opened at the end of the July 2014. This property is located 10 miles from the subject on a site that is in close proximity to Interstate 485 and 77. The opening of the center appeared to have limited negative impact on Carolina Place's 2014 tenant sales. However, 56% of the net rentable area is scheduled to roll during 2016 primarily due to the lease expirations of the anchors, JC Penney and Sears. Fitch will monitor the renewal activity at the property along with any further negative impacts from the opening of the Premium Outlet.

The second Fitch loan of concern, Rimrock Mall (5.6%), is a 702,317-sf regional mall, located in Billings, MT. The loan is sponsored by Starwood Capital Group. The property is anchored by JC Penney, Dillard's, and Dillard's Men & Children. The property was renovated in 2011 and has exhibited strong performance since issuance, however is facing significant rollover in the next 18 months. As of December 2014, the servicer reported occupancy was 95% with a debt service coverage ratio of 2.61x. JC Penney and inline tenant leases, comprising 24.6% of the net rentable area, are scheduled to expire by January 2016. In addition, the trade area which is in close proximity to the Brakken Oil Field could experience an economic slowdown due to petroleum industry contraction from low oil prices.

The largest loan in the pool (7.4%) is secured by a portfolio of 13 suburban office properties, Innsbrook Office Portfolio, located in the Richmond, VA MSA, 20 miles northwest of the central business district. The portfolio's rent roll is diversified with 96 unique tenants. The largest tenant, Capital One Services LLC, occupies 13.6% of the portfolio's net rentable area and has an upcoming lease expiration in 2016. The portfolio has historically outperformed with a vacancy rate that is less than half of the submarket average. As of December 2014, the vacancy rate was 4% which is almost 600 basis points lower than the Northwest Richmond submarket.

RATINGS SENSITIVITIES

The Rating Outlook for all classes remains Stable as overall performance of the transaction is as expected. The transaction has a large retail concentration with 5 loans in the top 15 (24.3%). Furthermore, significant sponsor concentration exists with General Growth Properties and RHP Properties Inc. comprising 30.1% of the pool. Fitch will continue to monitor these concentrations as well as the performance of the Fitch loans of concern. If performance deteriorates, negative rating implications are possible.

Fitch affirms the following classes:

--$108.6 million Class A-1 'AAAsf'; Outlook Stable;

--$80 million Class A-2 'AAAsf'; Outlook Stable;

--$160 million Class A-3 'AAAsf'; Outlook Stable;

--$363.1 million Class A-4 'AAAsf'; Outlook Stable;

--$149.9 million Class A-SB 'AAAsf'; Outlook Stable;

--$103(#)(a) million Class A-3FL 'AAAsf'; Outlook Stable;

--$0.0a million Class A-3FX 'AAAsf'; Outlook Stable;

--$116.3(b) million Class A-S 'AAAsf'; Outlook Stable;

--$88.1(b) million Class B 'AA-sf'; Outlook Stable;

--$56.4(b) million Class C 'A-sf'; Outlook Stable;

--$260.7(b) million Class PEX 'A-sf'; Outlook Stable;

--$976.8(*) million Class X-A 'AAAsf'; Outlook Stable;

--$66.9(a) million Class D 'BBB-sf'; Outlook Stable;

--$28.2(a) million Class E 'BBsf'; Outlook Stable;

--$14.1(a) million Class F 'Bsf'; Outlook Stable.

Fitch does not rate class G or the interest-only class X-B. The rating on class A-5 was withdrawn.

# Floating rate.

* Notional amount and interest-only.

a Privately placed pursuant to Rule 144A.

b Class A-S, Class B and Class C certificates may be exchanged for Class PEX certificates; and Class PEX certificates may be exchanged for Class A-S, Class B and Class C certificates.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (May 20, 2014);

--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 11, 2014).

A comparison of the transaction's Representations, Warranties, and Enforcement (RW&E) mechanisms to those of typical RW&Es for the asset class is available in the following reports:

--'Wells Fargo Commercial Mortgage Trust 2013-LC12' (Jul 09 2013).

--'Wells Fargo Commercial Mortgage Trust 2013-LC12' -- Appendix' (Jul 09 2013).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria - Effective from 20 May 2014 to 4 August 2014

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria -- Effective December 11, 2013 to December 10, 2014

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=984691

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Contacts

Fitch Ratings
Primary Analyst
Jay Bullie, +1-312-368-2079
Associate Director
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Committee Chairperson
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Jay Bullie, +1-312-368-2079
Associate Director
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Committee Chairperson
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com