DBRS Confirms Ratings of COMM 2014-UBS4

DBRS Limited (DBRS) has today confirmed the ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2014-UBS4 (the Certificates) issued by COMM 2014-UBS4 Mortgage Trust as follows:

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

All trends are Stable. DBRS does not rate the first loss piece, Class G. The Class PEZ certificates are exchangeable for the Class A-M, Class B and Class C certificates (and vice versa).
The rating confirmations reflect that the transaction’s performance has remained in line with expectations since issuance in July 2014. The pool consists of 91 loans, secured by 124 commercial properties. Since issuance, the transaction has experienced collateral reduction of 0.6% as a result of scheduled loan amortization. The transaction is concentrated by market type and loan size, as properties located in urban markets and the top ten loans represent 22.9% and 47.2% of the pool balance, respectively. As of the May 2015 remittance, there are no loans in special servicing and six loans on the servicer’s watchlist, representing 11.6% of the current pool balance. The largest loan on the watchlist is highlighted below.

The 597 Fifth Avenue loan (Pros ID#2, 8.2% of the pool balance) is secured by two Class B mixed-use retail and office properties in Midtown, Manhattan. The loan was added to the servicer’s watchlist because of the subject’s elevated vacancy rate of 46.4%, which has been consistent since issuance. According to the servicer, the borrower is continuing to market the vacancy on the fifth through seventh floors and has gained leasing momentum through its pre-built program. As a result of its marketing efforts, an undisclosed tenant has signed a lease for the fourth floor, and the borrower is in the process of building out space on the ninth floor for a tenant that will gain possession later this year. According to the April 2015 rent roll, the combined occupancy for the property was 53.6%, with Sephora USA, LLC (15.3% of the net rentable area (NRA)), the largest tenant, expiring in June 2016. In addition, the third-largest tenant, Hall Capital Partners LLC (7.3% of NRA), will likely vacate its space upon its December 2015 lease expiration; however, the borrower is in discussions with an existing tenant that has shown interest in extending its lease and expanding its footprint at the subject. Despite the low occupancy rate, the loan remains current with a YE2014 amortizing debt service coverage ratio of 1.13 times and benefits from an outstanding reserve balance totalling $1.3 million as of May 2015.

DBRS continues to monitor this transaction in its Monthly CMBS Surveillance Report, with additional information on the DBRS viewpoint for this transaction. The June 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 related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

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

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