DBRS Confirms All Classes of COMM 2014-UBS2 Mortgage Trust

DBRS Limited (DBRS) confirmed the ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2014-UBS2 issued by COMM 2014-UBS2 Mortgage Trust as follows:

--Class A-2 at AAA (sf)
--Class A-3 at AAA (sf)
--Class A-SB at AAA (sf)
--Class A-4 at AAA (sf)
--Class A-5 at AAA (sf)
--Class A-M at AAA (sf)
--Class X-A at AAA (sf)
--Class B at AA (sf)
--Class C at A (low) (sf)
--Class PEZ at A (low) (sf)
--Class X-B at BBB (sf)
--Class D at BBB (low) (sf)
--Class E at BB (low) (sf)
--Class F at B (low) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction. At issuance, the pool consisted of 59 loans, secured by 95 commercial and multifamily properties, with an original trust balance of $1.24 billion. Per the November 2018 remittance, there are 56 loans remaining in the pool with a current trust balance of $1.10 billion, representing a collateral reduction of 11.1% due to loan repayment and scheduled loan amortization. Approximately 89.5% of the pool is reporting year-end (YE) 2017 financials and based on the most recent year-end reporting, the pool reported a weighted-average (WA) debt-service coverage ratio (DSCR) and debt yield of 1.59 times (x) and 10.6%, respectively. The top 15 loans (72.7% of the pool) reported a WA DSCR and debt yield of 1.60x and 10.4%, respectively, reflective of a WA net cash flow (NCF) growth of 20.5% from DBRS Term NCF figures at issuance. The pool also benefits from defeasance as four loans (3.0% of the pool) are fully defeased.

Per the November 2018 remittance, there are 11 loans (28.6% of the pool) on the servicer’s watchlist, including three loans in the Top 15. Based on the YE2017 financials, loans on the servicer’s watchlist reported a WA DSCR of 1.62x, reflective of a 32.4% NCF growth over the DBRS Term NCF figures at issuance. There are two loans (5.0% of the pool) in special servicing, including Tops Markets Grocery Anchored Portfolio (Prospectus ID#11, 2.9% of the pool) and Creekside Mixed Use Development (Prospectus ID#15, 2.1% of the pool).

Tops Markets Grocery Anchored Portfolio was transferred to the special servicer in April 2018 due to Tops Markets (Tops) filing for Chapter 11 bankruptcy. Local news reports from August 2018 indicated that Tops Elmira (formerly 10.9% of portfolio net rentable area, expiry June 2027) will be closed in November 2018 as part of the restructuring effort; however, the other Tops locations in the portfolio remain operational. A bankruptcy court approved the company’s restructuring plan in November 2018 and the special servicer noted that it expects the borrower to be able to refinance the loan at its upcoming February 2019 maturity date. Creekside Mixed Use Development has been with the special servicer since November 2014 and was transferred for imminent default when the borrower's request for a release of holdback funds was denied and, subsequently, the borrower stopped making payments. The property is not currently listed for sale and the asset summary report provided suggests that litigation to pursue damages from the sponsor was under consideration. The loan has been real-estate owned since April 2015. Given the sharp value reduction since issuance, and the significant advances outstanding, DBRS expects the trust to experience a significant loss upon loan resolution.

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:

-- One Kendall Square (Prospectus ID#2, 10.6% of the pool)
-- Excelsior Crossings (Prospectus ID#3, 7.5% of the pool)
-- Canyon Crossings (Prospectus ID#8, 3.9% of the pool)
-- Tops Markets Grocery Anchored Portfolio (Prospectus ID#11, 2.9% of the pool)
-- Fountain Square (formerly 500 Jefferson) (Prospectus ID#14, 2.8% of the pool)
-- Creekside Mixed Use Development (Prospectus ID#15, 2.1% of the pool)
-- Beltway 8 Corporate Center I (Prospectus ID#19, 1.3% of the pool)
-- Waynesville Commons (Prospectus ID#31, 0.9% of the 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 North American CMBS Surveillance, which can be found on dbrs.com under Methodologies & Criteria. 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.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

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