DBRS Confirms Ratings on COMM 2014-UBS4 Mortgage Trust

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

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

All trends are Stable. 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 stable performance of the transaction, which has experienced a collateral reduction of 2.5% as a result of scheduled loan amortization since closing. At issuance, the collateral consisted of 91 fixed-rate loans secured by 124 commercial and multifamily properties. As of the May 2017 remittance, all 91 loans remain in the pool with an aggregate outstanding principal balance of $1,258.9 million. The pool is concentrated by market type and loan size as properties located in urban markets represent 24.2% of the pool balance and the top ten loans make up 47.4% of the pool balance. Based on the most recent reporting for the individual loans, the top 15 loans continue to exhibit stable performance with a weighted-average (WA) debt service coverage ratio (DSCR) of 1.83 times (x) and WA net cash flow growth of 22% compared with DBRS’s respective figures at issuance.

As of the May 2017 remittance, there are five loans on the servicer’s watchlist and two loans in special servicing, representing 11.6% and 0.5% of the current pool balance, respectively. The largest loan on the watchlist, 597 Fifth Avenue (Prospectus ID#2; 8.3% of the pool) is secured by two Class B mixed-use retail and office properties in Midtown Manhattan. The loan was added to the watchlist because the largest tenant, Sephora, which previously occupied retail space the subject and made up 80.5% of revenues for the property, vacated its space in March 2017. The servicer reported a tentative lease with Lululemon, however, which was anticipated to commence on June 1, 2017, and run through July 31, 2018. In the meantime, the borrower plans to fund any debt service shortfalls with additional equity.

The two loans in special servicing are Stanley Apartments (Prospectus ID#75; 0.27% of the pool) and Microtel Inn & Suites (Prospectus ID#80; 0.25% of the pool balance), which transferred in February 2016 and January 2016, respectively. Stanley Apartments has experienced decreased revenues because of its location within the Bakken Oil Fields. Stanley Apartments has also had a loan modification to full interest-only and will be transferred back to the master servicer after a three-month monitoring period. The special servicer foreclosed on Microtel Inn & Suites and a keeper has been engaged. DBRS anticipates that the trust will experience a loss with the resolution of this loan; however, it is expected to be contained within the non-rated class.

The rating assigned to Class C materially deviates from the higher rating implied by the quantitative results. The deviation is warranted because sustainability of loan trends has not yet been demonstrated.

DBRS has provided updated loan-level commentary and analysis for larger and/or pivotal watchlisted 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 register or log into at www.ireports.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 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.

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