BANK 2018-BNK13 Annual Report: A Performance Summary for Investors

This guide provides an accessible overview of BANK 2018-BNK13's performance over the past year and its implications for your investment.

First, it's crucial to understand that BANK 2018-BNK13 is not a traditional operating company like Apple or Coca-Cola. Instead, it functions as a Commercial Mortgage-Backed Security (CMBS) trust. Imagine it as a dedicated fund holding a collection of commercial real estate loans—those made to businesses for properties such as office buildings, shopping centers, or apartments. When you invest in BANK 2018-BNK13, you typically purchase bonds (also known as certificates) whose payments are backed by the income from these underlying loans, not by a company's stock. This filing confirms that the entity has no publicly traded common stocks.

This annual report covers the fiscal year that concluded on December 31, 2025.

Below is a detailed look at the trust's performance:

Business Overview

BANK 2018-BNK13 operates as a CMBS trust, managing a portfolio of commercial real estate loans totaling approximately $1.5 billion across 72 individual properties. Its performance is not measured by sales or services, but by how consistently borrowers make their loan payments. The trust's primary role involves collecting principal and interest payments from these commercial mortgage loans and distributing them to bondholders (certificate holders) according to a predetermined payment hierarchy, often referred to as a "payment waterfall." A Pooling and Servicing Agreement (PSA) governs the trust, defining the responsibilities of the trustee, master servicer, and special servicer in managing the loan collateral and distributing funds.

For the fiscal year ending December 31, 2025, the overall portfolio demonstrated resilient performance, with 89.5% of loans remaining current on their payments. However, delinquencies increased during the year:

• 4.2% of loans were 30-59 days delinquent.
• 2.1% were 60-89 days delinquent.
• 4.2% transferred to special servicing due to significant payment defaults or imminent default risk.

The trust's portfolio includes interests in several large commercial mortgage loans. Loans such as the Griffin Portfolio II and 1745 Broadway continued to perform strongly, maintaining high occupancy rates and healthy debt service coverage ratios (DSCRs), which indicate a property's ability to cover its mortgage payments. Conversely, properties like Fair Oaks Mall and Plaza Frontenac Mortgage Loans faced growing challenges, primarily from declining retail foot traffic and tenant vacancies, leading to their transfer to special servicing during the year. The Shoppes at Chino Hills also saw its performance decline, with its DSCR falling below 1.0x.

Various servicers manage these loans. Wells Fargo Bank, acting as the master servicer, successfully collected routine payments for most of the portfolio. CWCapital Asset Management LLC, the special servicer, actively pursued workout strategies for distressed assets, including negotiating forbearance agreements and exploring potential property sales for loans like Plaza Frontenac.

Financial Performance

In fiscal year 2025, the trust generated $98.5 million in gross interest income and $45.2 million in principal payments from its underlying loans. After deducting servicing fees, trustee fees, and property operating expenses for foreclosed assets, the net cash flow available for distribution totaled $87.3 million.

This cash flow enabled timely and full payment to all senior bond classes (Classes A-1, A-2, A-3, A-4, A-M, A-S, B, and C). However, increased special servicing fees and realized losses from the resolution of the Plaza Frontenac loan (which resulted in a $12.5 million loss after liquidation) meant that Class D certificates received 92% of their scheduled payments, experiencing a minor shortfall. No payments were made to Class E or F certificates.

Risk Factors

For a CMBS trust like BANK 2018-BNK13, risks primarily stem from the health of the commercial real estate market and the specific properties backing the loans:

• Commercial Real Estate Market Downturn: Ongoing weakness in specific sectors, especially regional malls and older office buildings, could lead to more defaults and losses. The trust holds 28% exposure to retail properties and 35% to office properties.
• Interest Rate Volatility: Significant increases in interest rates could make it harder for borrowers to refinance maturing loans, particularly those with lower DSCRs, thereby increasing their likelihood of default.
• Borrower Concentration: Although diversified, the top 5 loans account for 28% of the total outstanding balance. A default by any of these large borrowers (e.g., Griffin Portfolio II, 1745 Broadway) would significantly impact the trust.
• Economic Slowdown: A general economic recession could reduce tenant demand, increase vacancies, and decrease property values, affecting borrowers' ability to repay their loans.
• Geographic Concentration: Approximately 40% of the portfolio is concentrated in major metropolitan areas in the Northeast and California, making it vulnerable to regional economic shocks.
• Servicer Performance Risk: While servicers are contractually obligated to maximize recoveries, their effectiveness in managing distressed assets directly influences bondholder returns.
• Prepayment Risk: Though less common in CMBS, unexpected prepayments can affect the bonds' yield and duration.

Management Discussion

The trust's overall performance for fiscal year 2025 reflects a mixed commercial real estate market. While a significant portion of the portfolio, particularly high-quality office and multifamily assets, maintained strong performance, certain sectors—notably retail and some office properties—experienced significant distress. The increase in delinquencies and transfers to special servicing, as detailed above, prompted active management from CWCapital Asset Management LLC. Their efforts included loan modifications and the liquidation of the Plaza Frontenac loan. While this liquidation resulted in a realized loss, management undertook it to mitigate further potential losses to the trust. The trust's ability to make full and timely payments to senior bondholders despite these challenges highlights the structural protections inherent in CMBS. However, the partial payment to junior tranches demonstrates how credit events can impact the payment hierarchy. The trust continues to face headwinds from broader market trends, requiring ongoing proactive management of the collateral by the servicers.

Major Wins and Challenges This Year:

Wins:

• Strong Performance of Core Assets: Key office and multifamily properties, including 181 Fremont Street and the Griffin Portfolio II, maintained high occupancy and robust cash flows, providing a stable income stream.
• Successful Loan Modifications: The special servicer successfully modified terms for two smaller loans totaling $18 million, preventing potential defaults and keeping them performing.
• Timely Payments to Senior Bondholders: Despite market headwinds, all senior tranches received full and timely interest and principal payments.

Challenges:

• Increased Delinquencies in Retail Sector: Properties like Fair Oaks Mall and Plaza Frontenac continued to struggle with declining revenues and tenant departures, leading to defaults and significant losses.
• Office Market Uncertainty: While 1745 Broadway performed well, the broader trend of remote work introduced uncertainty for other office properties in the portfolio, with some experiencing minor occupancy dips.
• Rising Interest Rates: The general increase in interest rates impacted refinancing options for maturing loans, potentially increasing default risk for loans maturing in 2026 and 2027.

Financial Health

The trust concluded the year with a cash balance of $15.8 million in its reserve account, primarily designated for future property protection advances and potential liquidity needs.

The overall portfolio's Debt Service Coverage Ratio (DSCR) averaged 1.65x, a slight decrease from 1.78x last year. This ratio indicates that the properties' net operating income generally covered their mortgage payments 1.65 times over. While still healthy, this average DSCR reflects the impact of underperforming assets. The trust's liquidity primarily comes from the cash flow generated by the underlying mortgage loans. Its ability to continue making payments directly depends on the performance of these loans and the broader commercial real estate market. The partial payment to Class D certificates underscores how realized losses and increased special servicing costs affect more junior tranches, illustrating how credit events can impact the payment hierarchy and the financial health of specific bond classes.

Future Outlook

The outlook for BANK 2018-BNK13 remains closely tied to the broader commercial real estate market. We anticipate continued pressure on the retail and office sectors, particularly for properties with expiring leases or significant capital expenditure needs. The special servicer will likely remain active in managing distressed assets, focusing on loan modifications, foreclosures, and timely dispositions to mitigate losses.

The trust has 12 loans, representing 18% of the current balance, maturing in 2026. The ability of these borrowers to refinance will be a key determinant of future performance, especially given the current interest rate environment. Investors should closely monitor the performance of these maturing loans. The servicer's strategy will continue to follow the Pooling and Servicing Agreement, aiming to maximize recoveries for certificate holders through diligent asset management and timely resolution of defaulted loans.

Competitive Position

Unlike a traditional company, a CMBS trust does not have "competitive positioning" or "leadership" in the conventional sense. Its operations are strictly governed by legal agreements, such as the Pooling and Servicing Agreement, established at its creation. The servicers manage the loans according to these agreements, focusing on maximizing recoveries for bondholders. There are no strategic shifts or leadership changes as one would find in a corporate entity. The trust's "position" is defined by the quality and performance of its underlying collateral and the effectiveness of its appointed servicers in managing that collateral.

Market Trends or Regulatory Changes Affecting the Trust

Several market trends and potential regulatory changes could impact the trust:

• Remote Work Impact: The long-term effects of remote and hybrid work models continue to challenge the office sector, potentially leading to higher vacancies and lower valuations for some properties in the portfolio.
• E-commerce Growth: The ongoing shift to online shopping continues to pressure brick-and-mortar retail, particularly regional malls, which could further impact properties like Fair Oaks Mall.
• Interest Rate Environment: The Federal Reserve's monetary policy and future interest rate decisions will directly influence refinancing costs and property capitalization rates, affecting property values and borrower solvency.
• Environmental, Social, and Governance (ESG) Factors: Increasing investor and tenant demand for ESG-compliant buildings could pose a challenge for older properties in the portfolio that require significant upgrades to meet new standards.
• Potential Regulatory Scrutiny: While no specific changes are imminent, the CMBS market could face increased regulatory scrutiny regarding transparency and risk management, especially if defaults rise significantly.

Stay informed, and remember that investing in CMBS bonds carries specific risks related to the underlying real estate and borrower performance. Carefully consider these factors when evaluating your investment strategy.