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.
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.
Fitch affirms the following classes:
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.