DBRS Confirms All Classes and Assigns Positive Trends to Two Classes of UBS-Barclays Commercial Mortgage Trust 2012-C4

DBRS Limited (DBRS) confirmed all classes of the Commercial Mortgage Pass-Through Certificates issued by UBS-Barclays Commercial Mortgage Trust 2012-C4 as follows:

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

All trends are Stable, with the exception of Classes B and C, which have been assigned a Positive trend.

The trends assigned to Class B and Class C reflect the collateral reduction since issuance and the healthy cash flow growth for the underlying loans overall, with the largest 15 loans in the pool reporting a weighted-average (WA) net cash flow (NCF) growth of 7.6% as of the most recent year-end (YE) reporting over the DBRS NCF figures derived at issuance. At issuance, the pool consisted of 89 fixed-rate loans secured by 131 commercial properties. As of the October 2017 remittance, the pool had experienced a collateral reduction of 10.4% as a result of scheduled loan amortization and scheduled loan repayments that resulted in the full repayment of the Class A-1 bond and significant reduction of the outstanding principal balance of the Class A-2 bond. Fourteen of the largest 15 loans reported a YE2016 NCF figure, with a WA debt service coverage ratio (DSCR) and debt yield of 2.13 times (x) and 10.9%, respectively. Overall, loans representing 87.4% of the pool balance reported YE2016 financials, with a strong WA DSCR and debt yield of 2.08x and 11.9%, respectively, compared with the DBRS WA Term DSCR at issuance and going-in debt yield of 1.78x and 10.0%, respectively.

There are eight loans representing 13.8% of the pool that are secured by properties located in Houston, Texas, a market that has been distressed because of market declines related to the downturn in the energy markets, and more recently, has been impacted by the widespread destruction brought by Hurricane Harvey. Based on the October 2017 Significant Insurance Event reports forwarded by the servicer, none of the properties securing loans in the subject transaction have been confirmed to have been significantly impacted by the storm, but DBRS will continue to monitor for developments as new information becomes available.

As of the October 2017 remittance, there are two loans representing 0.95% of the pool in special servicing. The Worthington At The Beltway loan (Prospectus ID#52 – 0.5% of the pool) transferred to the special servicer for imminent non-monetary default, while the Hickory Commons loan (Prospectus ID#57 – 0.4% of the pool balance) transferred to the special servicer for imminent default and became real estate owned as of July 2017. There were 15 loans being monitored on the servicer’s watchlist representing 16.4% of the current pool balance, including three loans within the top 15. Prospectus ID#9 – Sun Development Portfolio, was flagged for a depressed DSCR as a result of ongoing renovations. The other two loans in the top 15 are being monitored for exposure to retail tenant bankruptcy closures, however replacement tenants are in place and these loans reported a WA YE2016 DSCR of 2.12x.

At issuance, DBRS shadow-rated the 1000 Harbour Boulevard loan (Prospectus ID#53 – 0.54% of the current pool balance) as investment-grade. DBRS has confirmed that the performance of the loan remains consistent with investment-grade loan characteristics.

Classes X-A and X-B are interest-only (IO) certificates that reference a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated reference tranche adjusted upward by one notch if senior in the waterfall.

All ratings will be subject to ongoing surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed or discontinued by DBRS.

DBRS has provided updated loan-level commentary and analysis for larger and/or pivotal watchlisted loans and specially serviced loans in the transaction, as well as the top 15 loans, in the DBRS Viewpoint 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 Viewpoint at viewpoint.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 principal methodology is CMBS North American Surveillance, which can be found on dbrs.com under Methodologies. For a list of the Structured Finance related methodologies that may be used during the rating process, please see the DBRS Global Structured Finance Related Methodologies document on www.dbrs.com. Please note that not every related methodology listed under a principal Structured Finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

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

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.