Kroll Bond Ratings Affirms Ratings on All Classes of BB-UBS Trust 2012-TFT

NEW YORK--()--Kroll Bond Rating Agency (KBRA) affirmed its ratings on all seven classes of BB-UBS Trust 2012-TFT certificates, a CMBS large loan transaction (see ratings list below) that is collateralized by three non-recourse first mortgage loans with a combined principal balance of $552.9 million. All three malls are indirectly owned and controlled by GGP Limited Partnership, a subsidiary of General Growth Properties, Inc. (GGP). The loans, which are not cross-collateralized or cross-defaulted, are each secured by a super-regional mall. The largest loan has a balance of $205.5 million (37.2% of the aggregate trust balance) and is secured by the borrower’s fee simple and leasehold interests in 661,851 sf of Tucson Mall, a 1.3 million sf super-regional mall located in Tucson, Arizona. The second largest loan has a balance of $202.0 million (36.5%) and is secured by the borrower’s fee simple and leasehold interests in 420,134 sf of Fashion Place Mall, a 1.0 million sf super-regional mall located in Murray, Utah. The third loan has a balance of $145.4 million (26.3%) is secured by a first mortgage lien on the borrower’s fee simple interest in 416,039 sf of Town East Mall, a 1.2 million sf super-regional mall located in Mesquite, Texas.

Tucson Mall is anchored by Dillard’s (187,742 sf), Sears (183,022 sf), Macy’s (139,078 sf), JCPenney (131,616 sf) and Forever 21 (81,806 sf). Forever 21 serves as collateral for the loan and the remaining anchors own their improvements and operate subject to a sub-ground lease. As of June 2013, the loan collateral was 95.3% occupied. Fashion Place Mall is anchored by Dillard’s (182,003 sf) and Nordstrom (137,600 sf). Both of the anchors own their improvements and the underlying land and are not part of the loan collateral. A third anchor space formerly occupied by Sears was acquired by an affiliate of GGP. According to the servicer, GGP is in discussions with potential replacement tenants. As of March 2013, the loan collateral was 99.3% occupied. Town East Mall is anchored by Sears (213,045 sf), Dillard’s (207,000 sf), JCPenney (195,475 sf) and Macy’s (193,866 sf) each own their land and improvements and are not part of the loan collateral. As of June 2013, the loan collateral was 96.7% occupied.

The transaction has exhibited a modest decline in operating performance since securitization. For the Full-Year 2012 period, comparable in-line tenants at Tucson Mall occupying less than 10,000 sf generated sales of $389 per sf, flat from the TTM period ended September 2012 and a modest 1.3% increase from $384 per sf as of Full-Year 2011. The reported sales performance is 15.4% below the International Council of Shopping Center’s (ICSC’s) average national mall sales, which were $460 per sf as of August 2013, and 30.4% below ICSC US West region sales, which were $559 per sf as of August 2013. For the period ended December 2012, in-line tenants at Fashion Place Mall occupying less than 10,000 sf generated sales of $705 per sf. This sales performance is 53.3% above the International Council of Shopping Centers (ICSC) average national mall sales, which were $460 per sf as of August 2013, and 26.1% above the ICSC US Western region sales, which were $559 per sf as of August 2013. Excluding the Apple Store, comparable in-line tenants occupying less than 10,000 sf generated sales per sf of $540, a 2.4% decrease from $553 per sf as of the trailing twelve months period ending September 2012. For the Full-Year 2012 period, comparable in-line tenants at Town East Mall with less than 10,000 sf generated sales of $456 per sf, a 5.6% increase from $432 per sf for the year ended December 2011. The reported sales performance is 0.9% below the International Council of Shopping Centers (ICSC) average national mall sales, which were $460 per sf as of August 2013, and 0.7% above ICSC U.S. Southern region sales, which were $453 per sf as of August 2013.

KBRA used information obtained from the trustee, U.S. Bank National Association, and servicer, Wells Fargo, National Association to analyze the loan collateral. The analysis produced an aggregate KBRA Net Cash Flow (KNCF) of $59.3 million and an aggregate KBRA value of $734.7 million, each of which has decreased 2.5% since issuance. The resulting pooled in-trust KBRA Loan to Value (KLTV) is 75.3%.

                               
Class         Rating         Balance (USD)         Rating Action
A         AAA (sf)         $363,413,000         Affirmed
X-A1         AAA (sf)         $363,413,000         Affirmed
B         AA (sf)         $62,112,000         Affirmed
C         A (sf)         $59,654,000         Affirmed
D         BBB (sf)         $36,387,000         Affirmed
E         BBB- (sf)         $31,346,000         Affirmed
TE2         BB (sf)         $14,840,000         Affirmed

1. Notional Class
2. Class TE is a rake certificate and is only entitled to payments from a subordinate interest in the cash flows from the Town East Mall loan.

17g-7 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 at http://www.krollbondratings.com/regulatory/17g-7.

Related Publications (available at https://www.krollbondratings.com):

BB-UBS Trust 2012-TFT Presale Report
CMBS Property Evaluation Guidelines
CMBS Single Borrower and Large Loan Rating Methodology

Contacts

Kroll Bond Rating Agency
Analytical:
Allison Werry, 646-731-2335
awerry@krollbondratings.com
or
David Chan, 646-731-2413
dchan@krollbondratings.com
or
Laura Shannon, 215-882-5860
lshannon@krollbondratings.com
or
Sarah Woo, 646-731-2361
swoo@krollbondratings.com

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Contacts

Kroll Bond Rating Agency
Analytical:
Allison Werry, 646-731-2335
awerry@krollbondratings.com
or
David Chan, 646-731-2413
dchan@krollbondratings.com
or
Laura Shannon, 215-882-5860
lshannon@krollbondratings.com
or
Sarah Woo, 646-731-2361
swoo@krollbondratings.com