DBRS Morningstar Confirmed All Classes of UBS-Barclays Commercial Mortgage Trust 2012-C3

DBRS, Inc. (DBRS Morningstar) confirmed all classes of Commercial Mortgage Pass-Through Certificates, Series 2012-C3 issued by UBS-Barclays Commercial Mortgage Trust 2012-C3 as follows:

-- Class A-4 at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (sf)
-- Class C at AA (low) (sf)
-- Class D at BBB (high) (sf)
-- Class E at BB (high) (sf)
-- Class X-B at BB (low) (sf)
-- Class F at B (high) (sf)

DBRS Morningstar changed the trends on Classes B and C to Stable from Positive because of increased risk associated with the specially serviced loans as well as upcoming maturity risk. All trends are now Stable.

As of the March 2021 remittance, the pool’s balance had been reduced to $758.7 million from $1.1 billion at issuance, as a result of the payoff of eight loans and scheduled amortization. All 68 loans remaining in the pool are approaching either an anticipated repayment date or a final maturity date over the next 18 months.

The largest loan in the pool is the 1000 Harbor Boulevard loan (Prospectus ID#1, 14.9% of the pool). The $120.0 million whole loan consists of a $113.0 million pari passu component in this deal and a $7.0 million pari passu component in UBSBB 2012-C4 (not rated by DBRS Morningstar). It is secured by a 617,187 square foot Class A office building in Weehawken, New Jersey, and is fully leased to two tenants: UBS Financial Services, Inc. (UBS), an affiliate of the loan seller, and Hartz Financial Corp., an affiliate of the sponsor. UBS has a lease that covers 95% of the gross leasable area through 2035. Performance has been stable since issuance with the YE2020 financials reporting net cash flow of $9.0 million, a 1.52 times (x) debt service coverage ratio (DSCR), and 100% occupancy compared to the issuance figures of $8.7 million, 1.47x, and 100%, respectively.

Five loans, representing 5.5% of the pool, are with the special servicer. The largest specially serviced loan is the Cooper Retail Portfolio loan (Prospectus ID#19, 1.7% of the pool), which is secured by three anchored retail centers totaling 211,750 square feet. The portfolio includes Magnolia Place, a 103,638 square foot shopping center built in 1995 in Columbus, Mississippi; Saufley Plaza, a 51,282 square foot shopping center built in 1998 in Pensacola, Florida; and Somerset Center, a 56,840 square foot shopping center built in 2000 in Somerset, Kentucky. The loan transferred to the special servicer in June 2020 after the borrower requested Coronavirus Disease (COVID-19) relief. Winn-Dixie vacated the Saufley Plaza property in March 2019, approximately one year after its bankruptcy filing and subsequent restructuring. Additionally, Office Depot (30,808 square feet) closed its location in the Somerset Center property in May 2019 and the loan's DSCR is projected to fall below 1.00x if releasing efforts are not successful. According to the servicer’s commentary, the Saufley Plaza property has a letter of intent pending for a 30,000 sf lease. Additionally, the borrower has submitted a lease for approval for tenant Ross Dress for Less (22,000 square feet, 10.4% of net rentable area, lease expiry in January 2031) at the Magnolia Place property. While there are no recent financials reported, the special servicer has coded the workout strategy on the March 2021 remittance as a modification. As part of this analysis, DBRS Morningstar applied stresses to the loan to account for the risk associated with two empty anchor spaces.

There are 19 loans, representing 21.9% of the pool, on the servicer’s watchlist. These loans are being monitored for various reasons, including low DSCRs or occupancy, tenant rollover risk, and/or pandemic-related forbearance requests.

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 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 are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by DBRS Morningstar.

DBRS Morningstar provides issuance metrics and all historical surveillance commentary on the DBRS Viewpoint platform.

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.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar’s outlooks and ratings are monitored.

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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