Fitch Ratings has downgraded four classes of COMM 2013-300P
RATING ACTIONS
Entity / Debt
Rating
Prior
COMM 2013-300P
A1 12625XAA5
LT
AAAsf
Rating Watch On
AAAsf
A1P 12625XAC1
LT
AAAsf
Rating Watch On
AAAsf
B 12625XAG2
LT
A-sf
Downgrade
AA-sf
C 12625XAJ6
LT
BBB-sf
Downgrade
A-sf
D 12625XAL1
LT
BB-sf
Downgrade
BBB-sf
E 12625XAN7
LT
Bsf
Downgrade
BB+sf
X-A 12625XAE7
LT
AAAsf
Rating Watch On
AAAsf
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VIEW ADDITIONAL RATING DETAILS
KEY RATING DRIVERS
The downgrades of classes B, C, D and E reflect declines in occupancy and net cash flow (NCF) since issuance, largely from the restructuring of the largest tenant
The Rating Watch Negative placement on all classes reflects the potential for downgrades absent property performance improvement, lack of positive leasing momentum of vacant space, limited progress on the execution of the borrower's business plans and/or limited information from the servicer or borrower regarding refinancing prospects. The borrower has been incorporating its own coworking concept, Studio, into the rebranding, leasing and marketing of vacancies at the property. For the 'AAAsf' rated classes, downgrades of one to two categories are possible, and for classes rated 'A-sf' and below, downgrades of one category are possible.
Factors that would lead to an affirmation and removal of the Rating Watch Negative include a successful execution of the borrower's business plan, positive leasing momentum that contributes to improved occupancy and cash flow and information from the servicer or borrower regarding securing refinancing.
Fitch expects to resolve the Rating Watch Negative within six months, which provides additional time for Fitch to potentially receive updates on leasing and other performance information at YE 2022 and 1Q23, as well as additional clarity on refinance prospects from the servicer or borrower. The loan matures in
Cash Flow Declines; Occupancy Concerns: The servicer-reported annualized
The downgrades are based on an updated Fitch sustainable NCF of
As of the
In 2020, the largest tenant,
Positive leasing momentum in 2022 included two new tenant leases and two existing tenant expansions, representing a combined 5% of the NRA. Fitch requested additional updates on overall leasing activity, as well as details on the subleased
Refinance Risk; Macroeconomic Headwinds: The loan has an upcoming scheduled maturity in
Fitch anticipates mounting macroeconomic headwinds through 2023 with rising interest rates, slowing growth and persistent inflation, which may impact the refinanceability of the loan at maturity.
Low Trust Leverage: The 'AAAsf' debt is
Collateral Quality; Excellent Location:
The property underwent substantial renovations between 1998 and 2000, including a new lobby, elevator modernization and upgraded building systems. Additionally, a facade renovation around the same time completely transformed the property's exterior with new windows, aluminum spandrel panels and retail storefronts. Fitch assigns
Limited Structural Features/Sponsorship: The loan has no reserves, no structure in place to mitigate the
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Should Fitch's sustainable NCF remain near
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Upgrades to any classes are considered unlikely during the remaining loan term due to the declining occupancy and cash flow trends since issuance.
However, if Fitch's sustainable NCF increases by at least 10%, classes may be affirmed and removed from Rating Watch Negative, should additional information be provided on positive leasing activity at or above market rental rates and progress is made by the borrower on securing refinancing and/or executing on its business plans.
Best/Worst Case Rating Scenario
International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
COMM 2013-300P has an ESG Relevance Score of '4' [+] for Waste & Hazardous Materials Management; Ecological Impacts due to the collateral's sustainable building practices including Green building certificate credentials, which has a positive impact on the credit profile, and is relevant to the ratings in conjunction with other factors.
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg.
Additional information is available on www.fitchratings.com
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