DBRS Morningstar Downgrades Ratings on Three Classes of UBS-Citigroup Commercial Mortgage Trust, Series 2011-C1

DBRS Limited (DBRS Morningstar) downgraded its ratings on three classes of the Commercial Mortgage Pass-Through Certificates, Series 2011-C1 (the Certificates) issued by UBS-Citigroup Commercial Mortgage Trust, Series 2011-C1, as follows:

-- Class C to BB (high) (sf) from A (low) (sf)
-- Class D to B (sf) from BB (high) (sf)
-- Class E to C (sf) from CCC (sf)

The trends for Classes C and D remain Negative and Class E has a rating that does not carry a trend. DBRS Morningstar placed Interest in Arrears designations for Classes C and D.

DBRS Morningstar also confirmed the ratings on the following classes as follows:

-- Class B at AAA (sf)
-- Class F at C (sf)
-- Class G at C (sf)

DBRS Morningstar also discontinued the ratings on Classes A-S and X-A as both certificates were repaid as of the December 2021 remittance.

The trend for Class B remains Stable, while Classes F and G both have a rating that does not carry a trend. DBRS Morningstar maintained the Interest in Arrears designations on Classes E, F, and G. As of the December 2021 remittance, five of the original 32 loans remain in the pool, representing a collateral reduction of 81.9% since issuance with a current trust balance of $121.8 million. Four of the remaining five loans, representing just over 95% of the pool balance, are in special servicing. Value declines from issuance for the two largest are the primary contributors to the continued build of interest shortfalls over the last year.

The rating downgrades generally reflect DBRS Morningstar’s loss expectations for the two largest loans in special servicing: Poughkeepsie Galleria (Prospectus ID#2, 50.2% of the pool) and Marriott Buffalo Niagara (Prospectus ID#9, 17.5% of the pool). Both loans have been on the DBRS Morningstar Hotlist because of cash flow declines and both were transferred to special servicing in April 2020 because of imminent monetary default.

The Poughkeepsie Galleria loan is secured by the borrower's fee simple interest in a regional mall in Poughkeepsie, New York. The pari passu loan transferred to special servicing in April 2020 following years of precipitous cash flow declines that were exacerbated amid the pandemic. The subject lost two anchors in 2020 and the collateral occupancy rate is currently over 25% below the issuance figure. The loan sponsor is an affiliate of the Pyramid Companies and the special servicer reports negotiations remain ongoing. The most recent valuation of $68.6 million is down sharply from the issuane appraisal of $237.0 million and suggests a significant loss will be realized at resolution.

The Marriott Buffalo Niagara loan is secured by a full-service hotel in Amherst, New York. The loan transferred to special servicing in April 2020 and the borrower has since expressed a desire to turn the property over to the trust. A foreclosure is expected to be initiated as soon as the statewide moratorium expires and based on the March 2021 valuation of $14.0 million, which is down sharply from the issuance figure of $57.2 million, a very high loss severity is expected at resolution.

For additional detail on these loans, please see the DBRS Morningstar loan commentary on the DBRS Viewpoint platform, for which information has been provided below.

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.

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#2 – Poughkeepsie Galleria (50.2% of the pool)
-- Prospectus ID#9 – Marriott Buffalo Niagara (17.5% of the pool)
-- Prospectus ID#11 – Hospitality Pool Specialists Portfolio – Pool 2 (14.2% 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 the North American CMBS Surveillance Methodology, 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.

The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482/baseline-macroeconomic-scenarios-application-to-credit-ratings.

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 [email protected].

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.

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 [email protected].

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