DBRS Confirms All Classes of UBS-Citigroup Commercial Mortgage Trust, Series 2011-C1

DBRS Limited (DBRS) confirmed the ratings on the following classes of Commercial Mortgage Pass-Through Certificates Series 2011-C1 (the Certificates) issued by UBS-Citigroup Commercial Mortgage Trust, Series 2011-C1, 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 D at A (sf)
-- Class E at BBB (high) (sf)
-- Class F at BB (high) (sf)
-- Class X-B at BB (low) (sf)
-- Class G at B (high) (sf)

All trends are Stable.

The rating confirmations reflect the overall healthy performance of the transaction since the last review in September 2017, when four classes were upgraded to reflect the increased credit support to the bonds with the significant paydown and defeasance since issuance, as well as the overall strong cash flow growth for the underlying loans since 2011. As of the August 2018 remittance, 25 of the original 32 loans remained in the pool with an aggregate balance of $423.1 million, representing a collateral reduction of 37.2% since issuance. In addition, four loans, representing 20.9% of the pool, including the largest loan in the pool, are fully defeased. Loans representing 61.5% of the pool reported YE2017 financials. These loans reported a weighted-average (WA) debt service coverage ratio (DSCR) and debt yield of 1.53 times (x) and 12.5%, respectively. Based on the servicer’s most recent reporting, the WA net cash flow growth for the 13 largest non-defeased loans was 17.2% over the DBRS issuance figures, with a WA DSCR and debt yield of 1.57x and 13.0%, respectively.

As of the August 2018 remittance report, there are four loans, representing 23.5% of the pool, including the second-largest loan in the pool, on the servicer’s watchlist and no loans in special servicing. The largest loan on the watchlist, Poughkeepsie Galleria (Prospectus ID #2, 15.3% of the pool), is secured by a regional mall located in Poughkeepsie, New York. At issuance, the $154.9 million senior loan (split into pari passu pieces contributed to the subject and the UBS 2012-C1 transaction, not rated by DBRS) was supplemented with a $21.0 million mezzanine loan for total debt of $175.9 million. The loan is being monitored due to a cash sweep that was triggered for a whole loan DSCR below 1.10x. The mall is anchored by JCPenney as well as three non-collateral stores in Macy’s, Sears and Target. The senior loan reported a YE2017 DSCR of 1.19x, a decrease from YE2016 DSCR of 1.22x, primarily due to declining base rents. As of the June 2018 rent roll, occupancy remained relatively unchanged at 88.3%; however, the average rental rate of the collateral decreased to $20.16 per square foot (psf) from $21.35 at March 2017. Sales for anchor tenants as well as in-line tenants less than 10,000 sf have also decreased year over year. For additional information on this loan, please see the loan commentary on the DBRS Viewpoint platform, for which information is provided below.

The second-largest loan on the watchlist, Hospitality Specialists Portfolio – Pool 2 (Prospectus ID #11, 4.5% of the pool), is also being monitored for low DSCR. The loan consists of a portfolio of three limited-service and extended-stay hotels located in Moline, Illinois, and Stevensville, Michigan. As of YE2017, the loan reported a DSCR of 1.16x, compared with YE2016 of 1.42x and DBRS Term DSCR at issuance of 1.46x. The decrease in cash flow is due to revenue declines for the Stevensville property, which reported a room revenue decline of 26.7% for 2017 from the previous year. That property’s demand is partially dependent on contract workers that are brought in to work at the local nuclear power plant after the plant’s reactors are periodically shut down for maintenance and refueling purposes. These shutdowns were less frequent in 2017 as compared with 2016, which resulted in a 25.8% decrease in occupancy. As of the YE2017 STR report, the Stevensville hotel reported an occupancy rate of 52.8% and RevPAR of $58.03. Both figures underperformed the hotel’s competitive set. For additional information on this loan, please see the loan commentary on the DBRS Viewpoint platform, for which information is provided below.

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 applicable reference obligation 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.

As part of this review, DBRS has provided updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Poughkeepsie Galleria (Prospectus ID #2, 15.3% of pool)
-- Marriott Buffalo Niagara (Prospectus ID #9, 5.4% of pool)
-- Hospitality Specialists Portfolio – Pool 2 (Prospectus ID #11, 4.5% of pool)
-- Plaza Mall of Georgia – Phase II (Prospectus ID #20, 2.5% of pool)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrs.com. The platform includes issuer and servicer data for the entire CMBS universe, as well as deal and loan-level commentary for all DBRS rated transactions.

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

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.

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 under Related Documents or by contacting us at info@dbrs.com.

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

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