Kroll Bond Rating Agency Assigns Preliminary Ratings to UBS-BB 2013-C5

NEW YORK--()--Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings for the UBS-BB 2013-C5 transaction (see ratings list below). UBS-BB 2013-C5 is a $1.49 billion CMBS conduit transaction collateralized by 81 fixed rate commercial mortgage loans that are secured by 122 properties.

The underlying collateral properties are located in 25 different states. California has the highest state concentration and represents 36.7% of the underlying collateral followed by Florida (12.0%), and Maryland (7.3%). The pool has exposure to all of the major property types with two concentrations in excess of 10.0%: retail (44.1%) and office (22.0%). Much of the California and retail exposure is represented by the properties that serve as collateral for the two largest loans, which together comprise over a quarter of the pool balance (27.6%). The loans, Santa Anita Mall (14.5%) and Valencia Town Center (13.1%), are each secured by regional malls located in Southern California that are owned and operated by the same sponsor, Westfield America, Inc. Together, these two malls account for 75.1% of the pool’s 36.7% California exposure, and 62.6% of its 44.1% retail exposure.

KBRA’s analysis of the transaction incorporated our multi-borrower rating process that begins with our analysts' evaluation of underlying collateral properties' financial and operating performance, which determine KBRA’s estimate of sustainable net cash flow (KNCF) and KBRA value. The analysis incorporates a detailed evaluation of underlying collateral properties’ financial and operating performance using our CMBS Property Evaluation Guidelines to determine Kroll Net Cash Flow (KNCF), which is a key input used in our credit modeling process. On an aggregate basis, KNCF was 4.2% less than the issuer cash flow. KBRA capitalization rates were applied to each asset’s NCF to derive values that were, on an aggregate basis, 32.1% less than third party appraisal values. The pool has an in-trust KLTV of 91.2% and an all-in KLTV of 92.7%. The model deploys rent and occupancy stresses, probability of default regressions, and loss given default calculations to determine losses for each collateral loan, which are then used to assign our credit ratings.

For complete details on the analysis, please see our presale Report, UBS-BB 2013-C5 published today at www.krollbondratings.com. The preliminary ratings are based on information known to KBRA at the time of this publication. Information received subsequent to this release could result in the assignment of final ratings that differ from the preliminary ratings.

Preliminary Ratings Assigned: UBS-BB 2013-C5

Class       Expected Rating       Balance (US$)
A-1       AAA (sf)       $82,500,000
A-2       AAA (sf)       $17,000,000
A-3       AAA (sf)       $200,000,000
A-4       AAA (sf)       $629,529,000
A-AB       AAA (sf)       $110,500,000
A-S       AAA (sf)       $120,660,000
X-A       AAA (sf)       $1,160,189,000*
X-B       AAA (sf)       $154,073,000
B       AA- (sf)       $96,528,000
EC       A- (sf)       $274,733,000
C       A- (sf)       $57,545,000
D       BBB- (sf)       $70,540,000
E       BB (sf)       $27,844,000
F       B (sf)       $27,845,000
G       NR       $44,551,823
* Notional Amount            

17g7 Disclosure

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report entitled CMBS: UBS-BB 2013-C5 17g-7 Disclosure Report.

Related publications (available at www.krollbondratings.com):

CMBS: U.S. CMBS Multi-Borrower Rating Methodology, published February 23, 2012

CMBS Property Evaluation Guidelines, published June 10, 2011

About Kroll Bond Rating Agency

KBRA was established in 2010 by Jules Kroll to restore trust in credit ratings by creating new standards for assessing risk and by offering accurate, clear and transparent ratings. KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

Contacts

Kroll Bond Rating Agency
Analytic Contacts:
Michael Brown, 646-731-2307
mbbrown@krollbondratings.com
or
Robin Regan, 646-731-2358
rregan@krollbondratings.com
or
Anna Hertzman, 646-731-2367
ahertzman@krollbondratings.com
or
Monika Joshi, 646-731-2360
mjoshi@krollbondratings.com

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Contacts

Kroll Bond Rating Agency
Analytic Contacts:
Michael Brown, 646-731-2307
mbbrown@krollbondratings.com
or
Robin Regan, 646-731-2358
rregan@krollbondratings.com
or
Anna Hertzman, 646-731-2367
ahertzman@krollbondratings.com
or
Monika Joshi, 646-731-2360
mjoshi@krollbondratings.com