DBRS Upgrades Four Classes of UBS-Citigroup Commercial Mortgage Trust, Series 2011-C1

DBRS Limited (DBRS) upgraded four classes of UBS-Citigroup Commercial Mortgage Trust, Series 2011-C1 as follows:

-- Class D to A (sf) from A (low) (sf)
-- Class E to BBB (high) (sf) from BBB (sf)
-- Class G to B (high) (sf) from B (sf)
-- Class X-B to BB (low) (sf) from B (high) (sf)

In addition, DBRS has confirmed the remaining classes in the transaction as follows:

-- Class A-3 at AAA (sf)
-- Class A-AB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class B at AAA (sf)
-- Class X-A at AAA (sf)
-- Class C at AA (sf)
-- Class F at BB (high) (sf)

The trend on Class G has been changed to Stable from Positive. All other trends are also Stable.

The rating upgrades reflect the strong performance of the transaction, which has experienced collateral reduction of 33.4% since issuance due to scheduled loan amortization, cash flow growth for outstanding loans and successful loan repayment, as six of the original 32 loans have been repaid in full as of the September 2017 remittance. Furthermore, the transaction benefits from defeasance collateral as four loans, representing 20.0% of the current pool (including the largest loan in the pool), are fully defeased.

The transaction benefits from a healthy in-place weighted-average (WA) DSCR of 1.60x and debt yield of 12.7%, according to the most recently reported year-end financials, which compares favorably with the DBRS term figures of 1.40x and 10.6%, respectively. In addition, based on the servicer’s most recent reporting, the WA NCF growth for the 13 largest non-defeased loans was 14.3% over the DBRS term figures, with a WA DSCR of 1.53x and debt yield of 12.6%.

As of the September 2017 remittance report, there are three loans, representing 17.1% of the pool, on the servicer’s watchlist; however, only one of these loans, representing 1.2% of the pool, is being monitored for performance-related issues. In addition, there is one loan, representing 4.1% of the pool, in special servicing; however, based on the most recent July 2017 individual appraisals, the combined value of the three properties securing the loan is significantly greater than the total outstanding loan exposure plus all outstanding advances.

The rating assigned to the Class F note materially deviates from the higher rating implied by the quantitative results. DBRS considers a material deviation to be a rating differential of three or more notches between the assigned rating and the rating implied by the quantitative results that is a substantial component of a rating methodology. The deviations are warranted, given the sustainability of loan performance trends not yet demonstrated.

DBRS has provided updated loan-level commentary and analysis for larger and/or pivotal watchlisted loans and the specially serviced loan in the transaction, as well as the Top 15 loans, in the DBRS commercial mortgage-backed securities (CMBS) IReports platform. Registration is free. To view these and future loan-level updates provided as part of DBRS’s ongoing surveillance for this transaction, please register or log into DBRS CMBS IReports 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 methodology is CMBS North American Surveillance, which can be found on www.dbrs.com under Methodologies.

The rated entity or its related entities did participate in the rating process. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities.

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