DBRS Assigns Provisional Ratings to COMM 2014-UBS2 Mortgage Trust

DBRS has today assigned provisional ratings to the following classes of Commercial Mortgage Pass-Through Certificates, Series 2014-UBS2 (the Certificates), to be issued by COMM 2014-UBS2 Mortgage Trust. The trends are Stable.

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-5 at AAA (sf)
-- Class A-M at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class B at AA (sf)
-- Class PEZ at A (low) (sf)
-- Class C at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (low) (sf)
-- Class F at B (low) (sf)

Classes X-B, D, E and F will be privately placed pursuant to Rule 144A.

The Class X-A and X-B balances are notional. DBRS ratings on interest-only certificates address the likelihood of receiving interest based on the notional amount outstanding. DBRS considers the interest-only certificates’ position within the transaction payment waterfall when determining the appropriate rating.

Up to the full certificate balance of the Class A-M, Class B and Class C certificates may be exchanged for Class PEZ certificates. Class PEZ certificates may be exchanged for up to the full certificate balance of the Class A-M, Class B and Class C certificates.

The collateral consists of 59 fixed-rate loans secured by 95 commercial properties, comprising a total transaction balance of $1,235,745,402. The DBRS sample included 31 loans, representing 83.9% of the pool. The pool has a high concentration of properties located in urban markets (29.6% of the pool), which benefit from a larger investor, consumer and tenant base, even in times of stress. In addition, loans secured by properties located in tertiary and rural markets represent only 10.2% of the pool. Properties securing seven loans, representing 30.3% of the DBRS sample, were modeled with Excellent or Above Average property quality, and only one loan, representing 1.1% of the pool, was modeled with Below Average property quality.

The pool is concentrated by loan size as the top ten loans represent 57.2% of the overall pool balance. The pool has a concentration level similar to a pool of 15 equal-sized loans. However, the pool is considered more diverse by property type compared with other recent conduit transactions. In addition, eight loans are secured by multiple property portfolios, which enhances diversity at the loan level. At 51.8% of the pool, the transaction has a high concentration of 17 loans with DBRS Refi debt service coverage ratios (DSCRs) below 1.00 times based on the trust balance. However, these DSCRs are based on a weighted-average stressed refinance constant of 9.8%, which implies an interest rate of 9.2%, amortizing on a 30-year schedule. This represents a significant stress of 4.2% over the weighted-average contractual interest rate of the loans in the pool. Five loans, representing 8.1% of the pool, have sponsorship and/or loan collateral associated with a prior voluntary bankruptcy filing, limited liquidity, a historical negative credit event or minimal experience with the respective property type. DBRS increased the probability of default for loans with identified sponsorship concerns.

The ratings assigned to the Certificates by DBRS are based exclusively on the credit provided by the transaction structure and underlying trust assets. All classes will be subject to ongoing surveillance, which could result in upgrades or downgrades by DBRS after the date of issuance.

Notes:
All figures are in U.S. dollars unless otherwise noted.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The Rule 17g-7 Report of Representations and Warranties is hereby incorporated by reference and can be found by clicking on the link to the right under Other Research or by contacting us at info@dbrs.com.

The applicable methodology is CMBS Rating Methodology, which can be found on our website under Methodologies.