Fitch Affirms Aventura Mall Trust 2013-AVM

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed the Aventura Mall Trust 2013-AVM, commercial mortgage pass-through certificates as follows:

--$747 million class A at 'AAAsf'; Outlook Stable.

KEY RATING DRIVERS

The affirmation is due to stable collateral performance since origination. At issuance the property was 99.8% occupied; occupancy as of the third quarter 2016 rent roll was 100%. The servicer reported a second quarter 2016 net cash flow (NCF) debt service coverage ratio (DSCR) of 2.44x, compared to 2.41x at year-end (YE) 2015 and 2.13x at issuance.

The transaction is secured by the Aventura Mall, a 2.1 million square foot (sf) (collateral consisting of approximately 1 million sf of space owned by the borrower and approximately 900,000 sf of space on ground leases to anchor tenants) super-regional mall located in Aventura, FL. The property is anchored by Bloomingdales, Macy's Home & Men, Macy's, Nordstrom, (all on ground leases), Sears (non-owned) and JC Penney. The mall underwent a $131 million renovation and expansion that was completed in 2008. Additionally, a 315,000 sf, three-level expansion that includes a retail wing, new restaurants, a new food court with indoor/outdoor seating, and a seven-story parking garage began construction in 2016 and is expected to be completed by YE 2017. Per the borrower's reporting to the servicer, the expansion, which is not part of the collateral, is on-time and on-budget.

The interest-only, fixed-rate (3.75%) loan has a seven-year term which matures Dec. 1, 2020. The loan is sponsored jointly by Turnberry Retail Holdings, LP (66.7%) and Simon Property Group(33.3%).

As part of its review, Fitch analyzed the performance of the loan and its underlying collateral. Fitch modeled cash flow based on the year-end 2015 OSAR, as well as the September 2016 rent roll. The Fitch stressed DSCR for the loan is 1.13x, compared to 0.99x modeled at issuance. The Fitch stressed loan-to-value ratio is 77.4%, which is based on capitalization of the Fitch-adjusted net cash flow at a rate of 7.00%, compared to 88.3% modeled at issuance. As it is considered one of the top regional malls in the country, Fitch applied a stressed capitalization rate lower than the typical range for retail properties. Fitch received total comparable inline sales through August 2016 of $547 million down from $630 million through August 2015.

Improved Performance/Strong Sales: The mall continues to exhibit improved performance, stable occupancy, and increasing cash flow. And although declined from last review, sales remain strong since issuance. Year-end (YE) 2015 net cash flow (NCF) is up 13.6% since issuance. Mall occupancy remains stable at 100% as of June 2016. The mall features a diverse tenant mix which generated total inline sales through the first eight months of the year of approximately $547 million, which places the property as one of the top performing malls in the country.

Single Asset Concentration: The transaction is secured by a single property and, therefore, is more susceptible to single-event risk related to the market, sponsor, or the largest tenants occupying the property.

Interest Only Loan: The loan is interest only through the loan term.

Granular Rent Roll: The tenancy at the Aventura Mall is diverse and includes multiple anchors, traditional and luxury in-line retailers and dining venues. In total, there are approximately 226 typical in-line tenants. The rent roll is very granular, with only one tenant, AMC Theater at 3.8% of the NRA, contributing more than 1.7% of the base rental revenue (excluding JCPenney).

Experienced Ownership and Management: The loan is sponsored jointly by Turnberry Retail Holdings, LP (66.7%) and Simon Property Group (33.3%). The property has been operated and managed by Turnberry Development, LLC since being built in 1983.

RATING SENSITIVITIES

The rating is expected to remain stable as it is anticipated the property will continue to perform within expectations. No rating actions are expected unless there are material negative changes in property occupancy or cash flow. Fitch will continue to monitor the mall's performance to ensure that revenues and expenses considered at the time of Fitch's initial ratings remain in line over the loan's term.

Initial Key Rating Drivers and Rating Sensitivity is further described in the New Issue report titled 'Aventura Mall Trust 2013-AVM' (Jan. 16, 2014)', which is available at www.fitchratings.com.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10

No third-party due diligence was provided or reviewed in relation to this rating action.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 01 Sep 2016)

https://www.fitchratings.com/site/re/886006

Criteria for Analyzing Large Loans in CMBS (pub. 01 Dec 2016)

https://www.fitchratings.com/site/re/890892

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 16 Jun 2016)

https://www.fitchratings.com/site/re/882401

Global Structured Finance Rating Criteria (pub. 27 Jun 2016)

https://www.fitchratings.com/site/re/883130

Related Research

Aventura Mall Trust 2013-AVM -- Appendix

https://www.fitchratings.com/site/re/729097

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1015912

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1015912

Endorsement Policy

https://www.fitchratings.com/regulatory

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Source: Fitch Ratings

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