KBRA Downgrades Two Ratings and Affirms One Rating for UBS-BB 2013-C6
26 Apr 2024 | New York
KBRA downgrades the ratings of two classes of certificates and affirms one rating of UBS-BB 2013-C6, a $128.1 million CMBS conduit transaction. The downgrades are driven by an increase in KBRA’s estimated losses for the remaining three assets, all of which are specially serviced and have been identified as K-LOCs with losses. In addition, the ratings considered the likelihood of interest shortfalls on the rated classes as the servicer works through the resolution of the assets. As of the April 2024 remittance period, all three assets are specially serviced, which include two REO assets (91.6% of the pool balance) and one non-performing matured balloon loan (8.4%). The details of the assets are outlined below.
Broward Mall (largest, 74.2%, REO)
- The asset is a 325,701 sf portion of a 1.0 million sf super-regional mall located in Plantation, Florida, approximately seven miles west of the Fort Lauderdale CBD. The non-collateral anchor tenants include Macy’s, JCPenney, Dillard’s, and a former Sears space. Sears, which is part of Seritage, remains undeveloped and vacant. The loan sponsor was Westfield America, Inc; however, the asset is currently being managed by Pacific Retail Capital Partners.
- KBRA maintains the asset's K-LOC designation and KPO of Underperform due to its REO status. The asset became REO in August 2022. The business plan was approved, and the property was listed for sale in Q2 2023. Initially, a purchase and sale agreement was executed but terminated in Q4 2023. An update has not been provided following the termination of the agreement.
- The servicer-reported occupancies and DSCs are: 78.3% / 2.13x (YTD September 2023), at issuance these were 83.1% / 2.82x. KBRA’s analysis of the February 2024 rent roll indicates the asset is 76.9% occupied.
- An appraisal dated July 2023 indicates an as-is value of $54.0 million, down from $166.8 million at securitization. As of the April 2024 remittance period, an ARA of $42.8 million was assigned; however, no ASER is outstanding. KBRA's analysis resulted in an estimated loss of $56.5 million (58.3% estimated loss severity).
The Heights (2nd largest, 17.4%, REO)
- The asset is a 102,177 sf retail center located in Brooklyn Heights, New York, approximately five miles southeast of Midtown Manhattan. The property is subject to a ground lease that expires in January 2048.
- KBRA maintains the asset's K-LOC designation and KPO of Underperform due to its REO status. The assignment of the leasehold interest occurred in October 2023 and the asset became REO. The asset was previously occupied by Regal Cinemas, an 80,010 sf user, and Barnes and Noble, a 22,167 sf user. Regal operated pursuant to a 2026 lease agreement but went dark in 2022 and ceased paying rent in 2023. Barnes and Noble vacated in 2023 at its lease expiration.
- The servicer-reported occupancies and DSCs are: 78.0% / -1.10x (YTD September 2023), 100% / -1.15x (YTD June 2022); at issuance these were 100% / 1.39x. KBRA’s analysis of the June 2023 rent roll indicated that the property is vacant.
- An appraisal dated December 2023 indicates an as-is value of $10.7 million, compared to $5.7 million as of May 2023, and $48.7 million at securitization. As of the April 2024 remittance period, an ARA of $15.2 million and a cumulative ASER of $420,950 is outstanding. The future advances have been deemed non-recoverable, and as of the April 2024 remittance period $3.0 million in principal, interest, and servicer advances have been reported. KBRA's analysis resulted in an estimated loss of $20.6 million (82.2% estimated loss severity).
240 Park Avenue South (3rd largest, 8.4%, Non-Performing Matured Balloon)
- The loan is collateralized by a 5,550 sf ground-floor retail condominium located in the Midtown South area of Manhattan in New York City.
- KBRA maintains the loan's K-LOC designation and KPO of Underperform due to its non-performing matured balloon status. The loan transferred to the special servicer in October 2022 for non-monetary default and failed to pay off at its March 2023 maturity. Bank of America, a former 4,160 sf, went dark ahead of its November 2023 lease expiration. Previously, the transaction parties agreed to a forbearance; however, the borrower decided not to proceed with the agreement. The borrower is now in default on the forbearance agreement and the special servicer is evaluating the next steps.
- According to the March 2024 rent roll the property is 25.0% occupied by Starbucks.
- An appraisal dated December 2023 indicates an as-is value of $15.1 million, down from $21.5 million at securitization. KBRA's analysis resulted in an estimated loss of approximately $922,000 (7.6% estimated loss severity).
Details concerning the classes with ratings changes are as follows:
- Class D to CCC (sf) from B (sf)
- Class E to CC (sf) from CCC (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 rating and relevant documents, click here.