DBRS Confirms Ratings of COMM 2014-UBS3

DBRS, Inc. (DBRS) has today confirmed the ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2014-UBS3 (the Certificates), issued by COMM 2014-UBS3 Mortgage Trust, as follows:

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

All trends are Stable. DBRS does not rate the first loss piece, Class H. The Class PEZ certificates are exchangeable for the Class A-M, Class B and Class C certificates (and vice versa).

The rating confirmations reflect the current performance of the transaction, which remains in line with DBRS expectations at issuance in June 2014. The pool consists of 49 loans, secured by 81 commercial properties. Since issuance, the transaction has experienced collateral reduction of 0.3% as a result of scheduled loan amortization.

As of the February 2015 remittance, there are no loans in special servicing or on the servicer’s watchlist. The transaction is concentrated by market type and loan size, as properties located in urban markets and the top ten loans represent 30.6% and 61.8% of the pool balance, respectively. One of the largest loans is highlighted below.

The Southfield Town Center loan (Pros ID#4, 7.6% of the pool balance) is secured by a five-building, 2.1 million sf office complex, located in Southfield, Michigan. As of YE2014, the portfolio had an occupancy rate of 66.0%, compared with 67.2% at issuance. Tenancy at the property is diverse, as the largest tenant, Fifth Third Bank, leases 4.9% of the NRA through August 2016. The building with the lowest occupancy rate is 3000 Town Center, at 38.2%. According to the servicer, two tenants have signed leases for a cumulative total of 48,731 sf, bringing the occupancy rate up to 46.6%, in line with the initial occupancy rate for this particular building. In addition to this leasing activity, an undisclosed tenant is in negotiations to lease over 300,000 sf at the property, which would potentially bring the collateral occupancy rate to 83.9%. Despite the current low occupancy rate, DBRS expects the loan to continue to perform as cited by a reported annualized Q3 2014 DSCR of 2.43x. The loan also has a TI/LC reserve balance of $16.9 million, as of February 2015.

DBRS continues to monitor this transaction in its Monthly CMBS Surveillance Report, with additional information on the DBRS viewpoint for this transaction, including details on the largest loans in the pool. The February 2015 Monthly CMBS Surveillance Report for this transaction will be published shortly. If you are interested in receiving this report, contact us at info@dbrs.com.

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

The applicable methodology is CMBS Rating Methodology (January 2012) and CMBS North American Surveillance (January 2015), which can be found on our website under Methodologies.

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