Fitch to Rate COMM 2014-UBS4 Commercial Mortgage Trust Pass-Through Certificates; Presale Issued
NEW YORK--(BUSINESS WIRE)--Fitch Ratings has issued a presale report on Deutsche Bank Securities, Inc.'s COMM 2014-UBS4 Commercial Mortgage Trust Pass-Through Certificates.
Fitch expects to rate the transaction and assign Rating Outlooks as follows:
--$53,395,000 class A-1 'AAAsf'; Outlook Stable;
--$143,249,000 class A-2 'AAAsf'; Outlook Stable;
--$80,295,000 class A-SB 'AAAsf'; Outlook Stable;
--$21,200,000 class A-3 'AAAsf'; Outlook Stable;
--$250,000,000 class A-4 'AAAsf'; Outlook Stable;
--$353,672,000 class A-5 'AAAsf'; Outlook Stable;
--$995,213,000a class X-A 'AAAsf'; Outlook Stable;
--$93,402,000b class A-M 'AAAsf'; Outlook Stable;
--$57,973,000b class B 'AA-sf'; Outlook Stable;
--$206,128,000b class PEZ 'A-sf'; Outlook Stable;
--$54,753,000b class C 'A-sf'; Outlook Stable;
(a) Notional amount and interest only.
(b) Class A-M, B and C certificates may be exchanged for class PEZ certificates, and class PEZ certificates may be exchanged for class A-M, B, and C certificates.
(c) Privately placed and pursuant to Rule 144A.
The expected ratings are based on information provided by the issuer as of July 16, 2014. Fitch does not expect to rate the $112,726,000 interest-only class X-B certificates, the $22,545,000 interest-only class X-C certificates, $74,077,798 interest-only class X-D certificates, the $83,740,000 class D, the $22,545,000 class E, the $25,766,000 class F, or $48,311,798 class G certificates.
The certificates represent the beneficial ownership interest in the trust, primary assets of which are 91 loans secured by 124 commercial properties having an aggregate principal balance of approximately $1.288 billion, as of the cutoff date. The loans were contributed to the trust by UBS Real Estate Securities Inc., German American Capital Corporation, Cantor Commercial Real Estate Lending, L.P., The Bancorp Bank, KeyBank National Association, and Pillar Funding LLC.
Fitch reviewed a comprehensive sample of the transaction's collateral, including site inspections on 70.3% of the properties by balance, cash flow analysis of 81.8%, and asset summary reviews on 87.8% of the pool.
KEY RATING DRIVERS
High Fitch Leverage: This transaction has leverage metrics that are worse than recently analyzed transactions, with a Fitch stressed DSCR of 1.13x and a Fitch stressed LTV of 108.9%. The average first-half 2014 Fitch DSCR and LTV are 1.19x and 105.6%, respectively. The average 2013 Fitch DSCR and LTV are 1.29x and 101.6%, respectively.
Lower Loan Concentration: Loan concentration is lower than that of other recent transactions. The largest loan represents 9.9% of the pool, and the top 10 loans represent 47.1%. The average top 10 concentrations for first-half 2014 and 2013 conduit transactions were 52.5% and 54.5%, respectively.
Limited Amortization: 20.7% of the pool is full-term interest-only, and 38.9% of the pool is partial-term interest-only. The remainder of the pool (48 loans, 40.4%) consists of amortizing balloon loans with loan terms of five to 12.5 years. Based on the scheduled balance at maturity, the pool will have paid down 12.1%.
For this transaction, Fitch's net cash flow (NCF) was 9.0% below the most recent net operating income (NOI; for properties for which a recent NOI was provided, excluding properties that were stabilizing during this period). Unanticipated further declines in property-level NCF could result in higher defaults and loss severities on defaulted loans, and could result in potential rating actions on the certificates. Fitch evaluated the sensitivity of the ratings assigned to COMM 2014-UBS4 certificates and found that the transaction displays slightly above-average sensitivity to further declines in NCF. In a scenario in which NCF declined a further 20% from Fitch's NCF, a downgrade of the junior 'AAAsf' certificates to 'BBB+sf' could result. In a more severe scenario, in which NCF declined a further 30% from Fitch's NCF, a downgrade of the junior 'AAAsf' certificates to 'BBBsf' could result. The presale report includes a detailed explanation of additional stresses and sensitivities on pages 80-82.
The master servicer will be Midland Loan Services, a Division of PNC Bank, National Association, rated 'CMS1' by Fitch. The special servicer will be Midland Loan Services, a Division of PNC Bank, National Association, rated 'CSS1'.
Additional Information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Criteria for Analyzing Multiborrower U.S. Commercial Mortgage Transactions' (June 18, 2014);
--'Global Structured Finance Rating Criteria' (May 20, 2014);
--'Rating Criteria for U.S. Commercial Mortgage Servicers' (Feb. 14, 2014);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 11, 2013);
--'Counterparty Criteria for Structured Finance and Covered Bonds' (May 14, 2014).
Applicable Criteria and Related Research: COMM 2014-UBS4 Mortgage Trust (US CMBS)
Criteria for Analyzing Multiborrower U.S. Commercial Mortgage Transactions
Global Structured Finance Rating Criteria
Rating Criteria for U.S. Commercial Mortgage Servicers
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
Counterparty Criteria for Structured Finance and Covered Bonds