DBRS Confirms Ratings of UBS-B 2012-C3

DBRS Limited (DBRS) has today confirmed the ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2012-C3, issued by UBS-Barclays Commercial Mortgage Trust, 2012-C3:

-- 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-S at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (sf)
-- Class F at B (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)

All trends are Stable. DBRS does not rate the first lost piece, Class G.

The rating confirmations reflect the continued stable performance of the transaction since issuance. The collateral consists of 76 fixed-rate loans secured by 113 commercial properties. As of the May 2015 remittance report, the pool has a balance of approximately $1.04 billion, representing a collateral reduction of 3.7% since issuance. Overall, the loans in the pool have reported stable performance, as according to YE2014 reporting, the pool had a weighted-average debt service coverage ratio (DSCR) and weighted-average debt yield of 1.6 times (x) and 11.0%, respectively.

As of the May 2015 remittance report, there are six loans on the servicer’s watchlist, representing 7.2% of the pool balance. There are no delinquent or special serviced loans.

The Hamptons Mixed Use Portfolio loan (Prospectus ID#14, 1.8% of the pool) was added to the servicer’s watchlist after the loan reported a DSCR of 0.78x at YE2014. The collateral is a portfolio of seven retail and mixed-use buildings in East Hampton and South Hampton, New York. The properties serve primarily as retail space, but there are office, industrial and multifamily components as well. The borrower has yet to remit full financial and property-level reporting since issuance; however, all major tenants, aside from General Home Store appear to remain at their respective locations. General Home Store formerly occupied 100% of 55 Newtown Lane property (2.8% of the portfolio NRA), accounting for approximately $67,600 in annual rental revenue. The properties have maintained a high historical occupancy rate, with multiple tenants in occupancy in excess of 15 years. Retail tenants have historically achieved strong sales volumes often exceeding $1,000 psf. The collateral is located in the Hamptons, a supply-constrained market with many barriers of entry and little inventory growth.

The Summit Village Apartments loan (Prospectus ID# 29, 1.0% of the pool) is secured by a 228-unit multifamily property located in Lawton, Oklahoma, and was added to the servicer’s watchlist after the YE2013 DSCR dropped to 0.78x due to a decrease in occupancy. The occupancy rate is volatile, as 50% to 60% of residents are Fort Sill employees, consisting of soldiers and civilians, which routinely move into and out of the subject. The DSCR at YE2014 improved to 0.95x, as rental and occupancy rates increased by $6 per unit and 29%, respectively. The occupancy rate has fluctuated significantly recently, as it was 66% at YE2013, 95% at YE2014 and 89% as of the February 2015 rent roll. The performance and DSCR is expected to continue to fluctuate with occupancy rate movements; however, the loan remains current.

At issuance, DBRS shadow-rated two loans, 1000 Harbor Boulevard (Prospectus ID#1) and Franklin Towne Center (Prospectus ID#8), representing 13.6% of the current pool balance, as investment grade. DBRS has today confirmed that the performance of the loans remains consistent with investment-grade loan characteristics.

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 and loans on the servicer’s watchlist. The May 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.

The applicable methodology are North American CMBS Rating Methodology (March 2015) 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.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.