KBRA Downgrades One Rating of UBS 2018-C12 to D (sf) Following Realization of Principal Losses
31 Jul 2025 | New York
KBRA downgrades the rating of the Class G-RR certificates to D (sf) from C (sf) for UBS 2018-C12, a $647.7 million conduit CMBS transaction, following realized losses taken against its outstanding principal balance resulting from the resolution Holiday Inn Houston SW - Sugar Land Area REO asset ($7.7 million loan balance at securitization) as reflected in the July 2025 remittance report. The asset incurred a loss of $9.7 million (126.5% loss severity). The loss exceeded KBRA's expectations as reflected in the July 2025 surveillance report due to additional fees and expenses incurred.
The Holiday Inn Houston SW - Sugar Land Area REO asset was resolved in June 2025 with net proceeds of $2.7 million being distributed to resolve fees, advances, and expenses. An appraisal dated November 2024 valued the subject on an As-Is basis at $3.8 million ($18,447 per key), compared to $14.9 million ($72,330 per key) at issuance. The asset consisted of a 206-key, full-service hotel located in Houston, Texas approximately eight miles northwest of Sugar Land Regional Airport.
The transaction has $31.1 million in cumulative principal losses (with adjustments) to date, as reported in the July 2025 remittance report. The realized losses reduced the principal balances of Class NR-RR to zero while the principal balance of Class G-RR has been reduced by $1.2 million (12.9% of its original balance). Along with the liquidation of the Holiday Inn Houston SW - Sugar Land Area REO asset, the transaction has incurred adjusted losses from the disposition of two previously specially serviced assets: Somerset Financial Center (former 10th largest, $18.0 million initial loan balance, 11.9% realized loss severity); Holiday Inn - Matteson ($11.9 million, 147.9% realized loss severity).
KBRA's other outstanding transaction ratings are unchanged at this time. KBRA most recently downgraded eight classes of certificates of the transaction in July 2025 based on KBRA's estimated losses.
Details concerning the classes with ratings changes are as follows:
- Class G-RR to D (sf) from C (sf)
Rating Sensitivities
Future rating actions will be dependent upon the ongoing assessment of the likelihood of ultimate payment of principal and accrued interest on the rated securities. 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.
For additional details, please see the UBS 2018-C12 July 2025 Surveillance Report linked below.
To access ratings and relevant documents, click here.