KBRA Affirms All Ratings for UBS-BB 2013-C5
30 Jan 2025 | New York
KBRA affirms all ratings for UBS-BB 2013-C5, a $254.1 million CMBS conduit transaction, which has two assets remaining in the mortgage pool, both of which have been identified as K-LOCs. The affirmations follow a surveillance review of the transaction and are based on the performance and expected recovery of the transaction's remaining two loans, which have not meaningfully changed since KBRA's last ratings change in January 2024. As of the January 2025 remittance period, both of the remaining loans (100.0%) have been modified and are performing after receiving maturity extensions. The details of the loans are outlined below.
Valencia Town Center (73.4%, K-LOC, Underperform, Watchlist)
- The loan is collateralized by a 657,837 sf portion of Valencia Town Center, a super-regional mall located in Valencia, California, approximately two miles north of the Santa Clarita CBD and 30 miles northwest of LA. Property is comprised of 18 one and two story buildings and the sponsor is Westfield. Non-collateral anchors include Macy's, JCPenney, and Sears, all of which own their improvements and the ground lease the land with the borrower. Sears had a March 2018 lease expiration date and closed its store. Collateral anchors include Edward's Theaters, Gold's Gym, and H&M.
- KBRA maintains the loan’s K-LOC designation and KPO of Underperform based on its prior status with the special servicer, a loan modification, and deteriorating collateral performance. The interest-only loan transferred to the special servicer in September 2022 and failed to pay off at its January 2023 maturity date. According to the servicer, an assumption of the debt closed in September 2023 with published reports indicating that the property was sold for $199.0 million ($313 per sf) to Centennial, a Dallas-based owner and operator of retail and mixed-use real estate. The loan's maturity date was extended to September 2027 and a partial prepayment of $8.1 million was applied to the loan during the October 2023 remittance period and an additional $227,573 was applied to principal in May 2024. The loan was returned to the master servicer in December 2023 and following a 30-day delinquency in April 2024, was paid current and remains current as of the January 2025 remittance.
- The servicer-reported occupancies and DSCs are: 79.0% / 1.88x (YTD March 2024), 79.0% / 1.85x (FY 2023); at closing, these were 97.0% / 3.03x. A March 2023 appraisal valued the collateral property at $181.1 million ($165 per sf), a 54.5% decline from $398.0 million ($364 per sf) at issuance. KBRA’s analysis resulted in an estimated loss given default of $27.8 million (17.5% estimated loss severity) on the $186.6 million loan balance. The loss is based on a distressed liquidation value of $153.9 million ($75 per sf). The value is derived by applying a 15% haircut to the March 2023 appraised value.
Harborplace (26.6%, K-LOC, Underperform, Watchlist)
- The loan is collateralized by the leasehold interest in a 148,928 sf lifestyle center located in the Baltimore, Maryland Inner Harbor neighborhood. The property is subject to a 108-year ground lease with the Mayor and City Council of Baltimore as the ground lessor.
- KBRA maintains the loan's K-LOC designation and KPO of Underperform based on its previous status with special servicer and recent delinquency. The loan transferred to the special servicer in February 2019 as a result of the borrower having indicated that they would no longer continue to fund cash shortfalls and that some of their vendors have not been paid. The special servicer filed an emergency request for a receiver after the sponsor failed to make the March 2019 debt service payment and failed to pay a $1.2 million judgement to one of the Harborplace tenants, Bubba Gump Shrimp, for not properly maintaining the common areas of the property. The receiver took possession of the property in May 2019. MCB Real Estate purchased the subject property in June 2023 with plans for a redevelopment plan along the city’s waterfront which required a change to the Charter of Baltimore City, which was authorized by voters in November 2024. The loan returned to the master servicer in October 2023 and was subsequently paid current. As part of the assumption, the loan was bifurcated into an A/B note split ($56.5 million A-Note, $10.9 million B-Note), and the loan's maturity date was extended to July 2026. Additionally, the loan's payment terms have been amended from amortizing to interest only.
- The servicer reports occupancies and DSCs are: 65.0% / 0.24x (YTD June 2024), 59.0% / -0.43x (FY 2023); these were 95.0% and 1.71x at issuance. A June 2023 appraisal valued the collateral property at $46.5 million ($312 per sf), a 56.9% decline from $108.0 million ($725 per sf) at issuance. KBRA’s analysis resulted in an estimated loss of $54.4 million (80.7% estimated loss severity) on the $67.5 million whole loan balance. The loss is based on a liquidation value of $16.7 million ($112 per sf).
Rating Sensitivities
Future rating actions will be dependent upon the ongoing assessment of the timing and likelihood of ultimate payment of principal and accrued interest on the rated certificates. The assessment will consider the expected and actual losses on the remaining assets in the transaction, as well as, the magnitude and extent of interest shortfalls, if any, on the certificates.
To access ratings and relevant documents, click here.
Related Publication
Methodologies
- Structured Finance: Global Structured Finance Counterparty Methodology
- CMBS: North American CMBS Property Evaluation Methodology
- CMBS: North American CMBS Single Borrower & Large Loan Rating Methodology
- CMBS: Methodology for Rating Interest-Only Certificates in CMBS Transactions
- ESG Global Rating Methodology