DBRS Morningstar Confirms All Classes of COMM 2014-UBS3 Mortgage Trust, Removes Two Classes From UR-Neg.

DBRS, Inc. (DBRS Morningstar) confirmed all classes of Commercial Mortgage Pass-Through Certificates, Series 2014-UBS3 issued by COMM 2014-UBS3 Mortgage Trust (the Trust) as follows:

-- Class A-3 at AAA (sf)
-- Class A-4 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 E at BB (high) (sf)
-- Class X-C at BB (high) (sf)
-- Class F at BB (sf)
-- Class X-D at B (sf)
-- Class G at B (low) (sf)

As part of this review, DBRS Morningstar removed Classes G and X-D from Under Review with Negative Implications where it had placed them on August 6, 2020. All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since the last review. At issuance, the trust comprised of 49 fixed rate loans secured by 81 commercial, leased-fee, and multifamily properties with a trust balance of $1.06 billion. Per the March 2021 remittance report, there were 41 loans secured by 70 properties remaining in the trust with a trust balance of $856.8 million, representing a 18.9% collateral reduction since issuance. Two loans were liquidated from the trust in 2019, resulting in a $15.6 million loss to the nonrated Class H. DBRS Morningstar previously downgraded Classes G and X-D in March 2020 because of the reduced credit support following the realized losses. Over the previous 12 months, no loans have been repaid and one loan, North Penn Business Park (Prospectus ID#18 – 2.2% of the trust balance), was fully defeased, bringing the total deal defeasance to five loans or 6.4% of the trust balance.

The trust is concentrated by loan size as the largest 15 loans comprise 80.5% of the trust balance and there are four loans, representing 32.1% of the trust balance, structured with full-term IO payments. The trust benefits from loans secured by urban properties as three loans, totaling 28.6% of the trust balance, have DBRS Morningstar Market Ranks of 6 or greater. There is no near-term maturity risk as the earliest loan maturity date is in October 2023.

There are only two loans, comprising 1.1% of the trust balance, in special servicing as of the March 2021 remittance report. The special servicer is in the process of forbearance discussions with both loan borrowers. Thirteen loans, secured by 21.7% of the trust balance, were on the servicer’s watchlist; however, two of the three largest watchlist loans are on the watchlist solely for deferred maintenance. DBRS Morningstar was previously concerned with the largest watchlisted loan, Southfield Town Center (Prospectus ID#4 – 8.8% of the trust balance), as the Class B office property in Southfield, Michigan realized a considerable net cash flow (NCF) decrease in 2019 following occupancy rate declines since issuance. The borrower was able to increase the property’s occupancy rate from 64.7% in December 2017 to 74.7% in September 2020 and the annualized trailing nine-month ending September 30, 2020, NCF rebounded to a satisfactory $16.8 million, slightly greater than the issuer’s underwritten NCF of $16.4 million at issuance. While the submarket exhibits a high vacancy rate, the property does not have any major upcoming lease expirations and DBRS Morningstar anticipates that the collateral’s performance will be stable in the near term.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

Classes X-A, X-B, X-C, and X-D 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 are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by DBRS Morningstar.

DBRS Morningstar provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Prospectus ID#4 – Southfield Town Center (8.8% of the pool)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com. The platform includes issuer and servicer data for most outstanding CMBS transactions (including non-DBRS Morningstar rated), as well as loan-level and transaction-level commentary for most DBRS Morningstar-rated and -monitored transactions.

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

The principal methodology is North American CMBS Surveillance Methodology (March 6, 2020), which can be found on dbrsmorningstar.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 Morningstar Global Structured Finance Related Methodologies document, which can be found on dbrsmorningstar.com in the Commentary tab under Regulatory Affairs. 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.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar 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. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The DBRS Morningstar long-term rating scale definition indicates that ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

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

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