DBRS Confirms Ratings of COMM 2014-UBS3 Mortgage Trust

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 overall performance of the transaction, which remains in line with DBRS expectations at issuance. At issuance, the pool consisted of 49 fixed-rate loans secured by 81 commercial properties. As of the February 2017 remittance, all 49 loans remain in the pool with an aggregate outstanding principal balance of $1.04 billion, representing a collateral reduction of 1.3% since issuance as a result of scheduled loan amortization. As of the most recent year-end reporting, the pool reported a weighted-average (WA) debt service coverage ratio (DSCR) of 1.60 times (x) and WA debt yield of 9.5%, an improvement over the WA DBRS term DSCR and DBRS debt yield at issuance of 1.47x and 8.6%, respectively.

The pool is concentrated by loan size, as the largest loan represents 10.1% of the pool, while the largest ten loans represent 62.2% of the pool. Four loans (26.4% of the pool) are structured with full interest-only (IO) terms, while an additional nine loans (33.0% of the pool) have partial IO periods remaining; of those, six loans (20.3% of the pool) are scheduled to convert from IO to principal and interest debt service payments within the next three months. One loan representing 0.5% of the pool balance has fully defeased. Loans representing 80.3% of the pool are reporting partial-year 2016 net cash flow (NCF) figures, while loans representing 16.4% of the pool have reported full-year 2016 figures. Based on the most recent cash flow reporting, the Top 15 loans reported a WA DSCR of 1.62x, reflective of a WA NCF growth of 9.25% over the DBRS cash flows for those loans at issuance.

As of the February 2017 remittance report, there are two loans in special servicing, representing 1.8% of the pool balance, as well as five loans on the servicer’s watchlist, representing 7.6% of the pool balance, including two in the Top 15. The larger of the specially serviced loans is in foreclosure, with the special servicer noting that resolution could be delayed, as the borrower is contesting the foreclosure. Based on the most recent appraised value for the collateral securing the loan, DBRS anticipates a loss will be incurred at resolution but currently expects that loss to be contained to the unrated Class H bond. The smaller specially serviced loan recently transferred for delinquency, with a workout strategy to be determined according to the special servicer.

DBRS has provided updated loan level commentary and analysis for larger and/or pivotal watchlisted and specially serviced loans, as well as for the largest 15 loans in the pool, in the DBRS CMBS IReports platform. To view these and future loan level updates provided as part of DBRS’s ongoing surveillance for this transaction, please log into DBRS CMBS IReports at www.ireports.dbrs.com.

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

The principal methodologies are North American CMBS Rating Methodology (January 2017) and CMBS North American Surveillance (December 2016), which can be found on dbrs.com under Methodologies.

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