CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed 11 classes of Deutsche Bank Securities, Inc.'s COMM 2014-UBS4 commercial mortgage pass-through certificates. A full list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The affirmations are based on the stable
performance of the underlying collateral pool with no material changes
since issuance. There are, however, two small loans (0.5%) in special
servicing and five loans representing 10.4% of the current pool balance
have been placed on the servicer's watchlist mostly due to lease
rollover and deferred maintenance issues.
As of the June 2016 distribution date, the pool's aggregate principal balance has been reduced by 1.4% to $1.27 billion from $1.29 billion at issuance. No loans are defeased. Interest shortfalls are currently affecting class G.
The first specially serviced loan (0.3%) is secured by a 39 unit multi-family property located in Stanley, ND, which is in the Bakken formation. The loan transferred to special servicer in February 2016 for imminent default. The property is currently 64% occupied as of March 16 and the cash flow from the property is reportedly insufficient to cover debt service and anticipated capital expenses. The borrower has advised that they will no longer be able to cover the shortfalls without a modification of the existing loan terms. A workout proposal was received in May 2016 and is under review with the special servicer. The year-end (YE) 2015 net operating income decreased 9% from issuance causing the debt service coverage ratio (DSCR) to decline to 1.45x from 1.59x at issuance.
The other specially serviced loan (0.3%) is secured by an 81 room limited service hotel located in Baton Rouge, LA. The loan transferred to the special servicer in January 2016 due to the borrower failing to make the November 2015 and subsequent payments, but has since brought the loan current. The special servicer has engaged counsel and is in the process of starting enforcement actions while negotiations continue with the borrower. As of YE 2015, the DSCR and occupancy was reported to be 1.59x and 89%, respectively.
The State Farm Portfolio is the largest loan in the pool, representing 10.1% of the current pool balance. The portfolio comprises 14 suburban office properties spread across 11 cities in 11 states. All of the properties are 100% leased to State Farm Mutual Automobile Insurance Company (State Farm) and act as regional operations headquarters. Leases on approximately 92.4% of the portfolio net rentable area (NRA) extend to 2028. None of the leases were structured with termination options. The trust loan is a pari passu piece of a $383.5 million whole loan, which, in addition to $86 million of mezzanine debt and $76.7 million of sponsor equity, was used to acquire the portfolio. The YE 2014 DSCR was reported to be 1.81x.
RATING SENSITIVITIES
All classes maintain Stable Outlooks. Due to
the recent issuance of the transaction and stable performance of the
underlying collateral, Fitch does not expect positive or negative
ratings migration unless material economic or asset-level changes to the
pool metrics warrant such changes.
DUE DILIGENCE USAGE
No third party due diligence was provided or
reviewed in relation to this rating action.
Fitch affirms the following classes:
--$35.6 million class A-1 at 'AAAsf'; Outlook Stable;
--$143.2
million class A-2 at 'AAAsf'; Outlook Stable;
--$80.3 million class
A-SB at 'AAAsf'; Outlook Stable;
--$21.2 million class A-3 at
'AAAsf'; Outlook Stable;
--$250.0 million class A-4 at 'AAAsf';
Outlook Stable;
--$353.7 million class A-5 at 'AAAsf'; Outlook
Stable;
--$93.4 million class A-M at 'AAAsf'; Outlook Stable;
--$977.4
million class X-A at 'AAAsf'; Outlook Stable.
--$58.0 million class
B at 'AA-sf'; Outlook Stable;
--$206.1 million class PEZ at 'A-sf';
Outlook Stable;
--$54.8 million class C at 'A-sf'; Outlook Stable.
The class A-M, B and C certificates may be exchanged for class PEZ certificates, and vice versa. Fitch does not rate the class D, E, F and G certificates or the interest-only class X-B, X-C or X-D.
Additional information is available at www.fitchratings.com.
Applicable Criteria
Counterparty Criteria for Structured Finance
and Covered Bonds (pub. 14 May 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158
Criteria
for Rating Caps and Limitations in Global Structured Finance
Transactions (pub. 16 Jun 2016)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=882401
Global
Structured Finance Rating Criteria (pub. 06 Jul 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952
U.S.
and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S.
Re-REMIC Criteria (pub. 13 Nov 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395
Related Research
COMM 2014-UBS4 Mortgage Trust -- Appendix
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=764648
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1007920
Solicitation
Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1007920
Endorsement
Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
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