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Rating Action:

Moody's affirms eight and downgrades one class of COMM 2014-UBS5

05 Nov 2020

Approximately $926 million of structured securities affected

New York, November 05, 2020 -- Moody's Investors Service, ("Moody's") has affirmed the ratings on eight classes and downgraded the rating on one class in COMM 2014-UBS5 Mortgage Trust, Commercial Mortgage Pass-Through Certificates as follows:

Cl. A-2, Affirmed Aaa (sf); previously on Dec 11, 2019 Affirmed Aaa (sf)

Cl. A-3, Affirmed Aaa (sf); previously on Dec 11, 2019 Affirmed Aaa (sf)

Cl. A-4, Affirmed Aaa (sf); previously on Dec 11, 2019 Affirmed Aaa (sf)

Cl. A-M, Affirmed Aa1 (sf); previously on Dec 11, 2019 Affirmed Aa1 (sf)

Cl. A-SB, Affirmed Aaa (sf); previously on Dec 11, 2019 Affirmed Aaa (sf)

Cl. B, Affirmed Aa3 (sf); previously on Dec 11, 2019 Affirmed Aa3 (sf)

Cl. C, Downgraded to Baa1 (sf); previously on Dec 11, 2019 Affirmed A3 (sf)

Cl. PEZ**, Affirmed A1 (sf); previously on Dec 11, 2019 Affirmed A1 (sf)

Cl. X-B-1*, Affirmed Aa3 (sf); previously on Dec 11, 2019 Affirmed Aa3 (sf)

* Reflects interest-only classes

** Reflects exchangeable classes

RATINGS RATIONALE

The ratings on six principal and interest (P&I) classes were affirmed because the transaction's key metrics, including Moody's loan-to-value (LTV) ratio, Moody's stressed debt service coverage ratio (DSCR) and the transaction's Herfindahl Index (Herf), are within acceptable ranges.

The rating on one P&I class, Cl. C, was downgraded due a decline in pool performance and higher anticipated losses driven primarily by the increase from specially serviced and troubled loans. As of the October 2020 remittance statement, specially serviced loans account for 22% of the pool and troubled loans account for 9% of the pool. Furthermore, there is a high exposure to hotel and retail properties at 27% and 16% of the total pool, respectively. Of the two property types, 76% are currently in special servicing or on the watchlist.

The rating on the interest-only (IO) class, Class X-B-1, was affirmed based on the credit quality of its referenced class.

The rating on the exchangeable class, Class PEZ, was affirmed due to the credit quality of the referenced exchangeable classes.

The coronavirus outbreak, the government measures put in place to contain it, and the weak global economic outlook continue to disrupt economies and credit markets across sectors and regions. Our analysis has considered the effect on the performance of commercial real estate from the current weak US economic activity and a gradual recovery for the coming months. Although an economic recovery is underway, it is tenuous and its continuation will be closely tied to containment of the virus. As a result, the degree of uncertainty around our forecasts is unusually high. Stress on commercial real estate properties will be most directly stemming from declines in hotel occupancies (particularly related to conference or other group attendance) and declines in foot traffic and sales for non-essential items at retail properties.

We regard the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety.

Moody's rating action reflects a base expected loss of 12.2% of the current pooled balance, compared to 8.1% at Moody's last review. Moody's base expected loss plus realized losses is now 9.8% of the original pooled balance, compared to 6.6% at the last review. Moody's provides a current list of base expected losses for conduit and fusion CMBS transactions on moodys.com at http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF215255.

FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS:

The performance expectations for a given variable indicate Moody's forward-looking view of the likely range of performance over the medium term. Performance that falls outside the given range can indicate that the collateral's credit quality is stronger or weaker than Moody's had previously expected.

Factors that could lead to an upgrade of the ratings include a significant amount of loan paydowns or amortization, an increase in the pool's share of defeasance or an improvement in pool performance.

Factors that could lead to a downgrade of the ratings include a decline in the performance of the pool, loan concentration, an increase in realized and expected losses from specially serviced and troubled loans or interest shortfalls.

METHODOLOGY UNDERLYING THE RATING ACTION

The principal methodology used in rating all classes except exchangeable classes and interest-only classes was "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in September 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1244778. The principal methodology used in rating exchangeable classes was "Moody's Approach to Rating Repackaged Securities" published in June 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1230078. The methodologies used in rating interest-only classes were "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in September 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1244778 and "Moody's Approach to Rating Structured Finance Interest-Only (IO) Securities" published in February 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1111179. Please see the list of ratings at the top of this announcement to identify which classes are interest-only (indicated by the *) and exchangeable classes (indicated by the **). Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

DEAL PERFORMANCE

As of the October 13, 2020 distribution date, the transaction's aggregate certificate balance has decreased by 20.0% to $1.1 billion from $1.4 billion at securitization. The certificates are collateralized by 61 mortgage loans ranging in size from less than 1% to 10.6% of the pool, with the top ten loans (excluding defeasance) constituting 50.4% of the pool. Six loans, constituting 5.4% of the pool, have defeased and are secured by US government securities.

Moody's uses a variation of Herf to measure the diversity of loan sizes, where a higher number represents greater diversity. Loan concentration has an important bearing on potential rating volatility, including the risk of multiple notch downgrades under adverse circumstances. The credit neutral Herf score is 40. The pool has a Herf of 24, compared to 25 at Moody's last review.

As of the October 2020 remittance report, loans representing 67% were current or within their grace period on their debt service payments, 17% were beyond their grace period but less than 30 days delinquent, 8% were between 60 -- 89 days delinquent, and 2% were over 90 days delinquent.

Ten loans, constituting 35.4% of the pool, are on the master servicer's watchlist, of which four loans, representing 19.9% of the pool, indicate the borrower has requested relief in relation to coronavirus impact on the property. The watchlist includes loans that meet certain portfolio review guidelines established as part of the CRE Finance Council (CREFC) monthly reporting package. As part of Moody's ongoing monitoring of a transaction, the agency reviews the watchlist to assess which loans have material issues that could affect performance.

No loans have been liquidated from the pool and 12 loans, constituting 21.6% of the pool, are currently in special servicing. Four of the specially serviced loans, representing 7.7% of the pool, have transferred to special servicing since March 2020.

The largest specially serviced loan is the 6100 Wilshire Loan ($57.6 million -- 5.1% of the pool), which is secured by a 213,556 square foot (SF), 16-story, Class A office building located in the Miracle Mile District of Los Angeles, California. The property was built in 1986 and renovated in 2010. The property features floor-to-ceiling windows and 399 parking spaces within a 5-level subterranean parking structure. The loan was transferred to special servicing in October 2019 for imminent non-monetary default. A cash sweep was triggered due to the largest tenant, CBS Broadcasting Inc. (21% of net rentable area (NRA)), not providing a renewal notice within 12 months of its lease expiration in April 2020 and the borrower not being in compliance with cash management requirements. As of June 2020, the property was 82% occupied compared to 94% in June 2019. A forbearance agreement was executed in June 2020 and the loan is less than less than 30 days delinquent for the October 2020 payment. Moody's does not anticipate a loss on this loan.

The second largest specially serviced loan is the Ridgmar Mall Loan ($30.3 million -- 2.7% of the pool), which is secured by a 396,955 SF portion of a 1.3 million SF regional mall located in Fort Worth, Texas. The asset was also encumbered with $12.6 million of mezzanine debt at securitization. The five non-collateral anchors at securitization included Dillard's, J.C. Penney, Macy's, Sears and Neiman Marcus. Since origination, the Dillard's was converted to a clearance center and Macy's, Sears, and Neiman Marcus have all vacated. J.C. Penny is currently not on the closure list. The largest collateral tenants at the property include Rave Motion Pictures (15.5% of NRA; lease expiration December 2023) and Seaquest Interactive Aquarium (6.7% of NRA; lease expiration October 2027). The loan transferred to special servicing in October 2017 for imminent monetary default and property performance has continued to decline from securitization due to lower rental revenues. As of March 2020, the total mall occupancy was 47%, compared to 81% in March 2019 and 76% in March 2018. The borrower requested payment relief in April 2020 due to the coronavirus outbreak and is currently in maturity default. The loan is past due for the April 2020 payment. The loan is being dual-tracked on potential settlement discussions and enforcement of lender's right.

The third largest specially serviced loan is the Harwood Center Loan ($28.5 million -- 2.5% of the pool), which represents a pari-passu portion of a $86.0 million mortgage loan. The loan is secured by a fee and leasehold interest in an approximately 724,000 SF, Class A, office building and a contiguous nine-story parking garage located in the central business district (CBD) of Dallas, Texas. The property comprises of four parcels, of which three parcels totaling approximately 38,000 SF are subject to ground leases with expirations in 2077. As of March 2020, the property was 69% occupied, compared to 91% in December 2019. The decrease in occupancy is mainly due to the reduction of space by the largest tenant, Omnicom Group, in conjunction with their lease renewal through September 2030. The loan was transferred to special servicing in May 2020 for imminent monetary default. The borrower indicated an inability to fund the tenant improvement obligations that would trigger certain tenant offset rights. The lender issued a default notice and discussions are taking place with the borrower pursuant to a pre-negotiation agreement. The loan is past due for the August 2020 payment.

The remaining nine specially serviced loans are secured by a mix of property types.

Moody's has also assumed a high default probability for two poorly performing loans secured by hotel properties, constituting 9.2% of the pool. The first troubled loan, Canyon Ranch Portfolio (6.5% of the pool), is further discussed below. The second troubled loan, Breakwater Hotel (2.7% of the pool), is secured by a 99-room full-service hotel located in Miami Beach, Florida. The loan was placed on the watchlist since February 2019 and has experienced a declining trend in net operating income since securitization. Moody's has estimated an aggregate loss of $98.5 million (a 39.4% expected loss on average) for the troubled loans and eight of the specially serviced loans.

Moody's received full year 2019 operating results for 100% of the pool, and partial year 2020 operating results for 61% of the pool (excluding specially serviced and defeased loans). Moody's weighted average conduit LTV is 107%, compared to 101% at Moody's last review. Moody's conduit component excludes loans with structured credit assessments, defeased and CTL loans, and specially serviced and troubled loans. Moody's net cash flow (NCF) reflects a weighted average haircut of 13.7% to the most recently available net operating income (NOI). Moody's value reflects a weighted average capitalization rate of 10.1%.

Moody's actual and stressed conduit DSCRs are 1.63X and 1.06X, respectively, compared to 1.74X and 1.12X at the last review. Moody's actual DSCR is based on Moody's NCF and the loan's actual debt service. Moody's stressed DSCR is based on Moody's NCF and a 9.25% stress rate the agency applied to the loan balance.

The top three conduit loans represent 22.7% of the pool balance. The largest loan is the Loews Miami Beach Hotel Loan ($120.0 million -- 10.6% of the pool), which represents a pari-passu portion of $300.0 million mortgage loan. The loan is secured by a 790-room, full-service, beachfront hotel located in Miami Beach, Florida. The property consists of two oceanfront buildings, an 18-story main tower with 687 rooms and a six-story tower with 103 rooms, and houses one of the largest hotel meeting facilities in the South Beach area. The property was built in 1998 and underwent an approximately $50 million renovation that was completed in early 2017. Property performance improved significantly in 2018 and 2019 with the NOI DSCR above 3.50X for both years. The loan was placed on the watchlist in June 2020, and the borrower requested payment relief in relation to the coronavirus outbreak. A side letter agreement was executed which allows for the suspension of monthly furniture, fixtures and equipment (FF&E) reserve payments for the May, June and July 2020, with repayment of the deferred payments from August 2020 through April 2021 into the reserve account. The loan is interest-only for the full term and is beyond their grace period but less than 30-days delinquent for the October 2020 payment. Moody's LTV and stressed DSCR are 105% and 1.03X, respectively, compared to 92% and 1.17X at the last review.

The second largest loan is the Canyon Ranch Portfolio Loan ($73.7 million -- 6.5% of the pool), which represents a pari-passu portion of $147.4 million mortgage loan. The loan is secured by two full-service destination resort spa properties located in Lenox, Massachusetts and Tucson, Arizona. The two resorts, identified as The Canyon Ranch - Tucson Property and The Canyon Ranch - Lenox Property, contain a total of 277 guestrooms. The portfolio has experienced a decline in NOI since securitization largely due to an increase in expenses. The trailing twelve-month NOI through June 2020, which includes the months impacted by the coronavirus outbreak, decreased significantly to $3.2 million compared to $16.0 million at year-end 2019 and $22.3 million at year-end 2015. The loan was placed on the watchlist in May 2020 and the borrower subsequently requested relief. Relief was provided in the form of a consent agreement which allows for the reserve funds to cover loan payments for the April through August 2020. In addition, relief was also provided in the form of a side letter which allows for the suspension of monthly FF&E reserve payments for the May through July 2020 and tax and insurance payments for the April through May 2020. The borrower is expected to repay the reserves by December 2020. The loan was interest-only for 60 months and has amortized 1.8% since securitization. The loan is current through the October 2020 payment. Moody's has identified this as a troubled loan.

The third largest loan is the Summit Rancho Bernardo Loan ($63.1 million -- 5.6% of the pool), which is secured by a five-story, 196,734 SF, Class A office property located within the Rancho San Bernardo master-planned community in San Diego, California. The asset was also encumbered with $10.0 million of mezzanine debt at securitization. The property was formerly 100% leased to Nokia, a subsidiary of Microsoft Corporation, through August 2020. The loan was placed on the watchlist in May 2017 when Nokia elected to exercise its early-termination rights in 2017 and pay a $13.3 million termination fee. As of March 2020, the property has been fully leased to Apple, Inc., and rent commencement was expected to begin in September 2020 with a lease expiration in January 2028. The loan was interest-only for 60 months and has amortized 1.5% since securitization. The loan is current through the October 2020 payment. Moody's has removed this as a troubled loan and applied a lit/dark value into our analysis. Moody's LTV and stressed DSCR are 144% and 0.81X, respectively.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

The analysis includes an assessment of collateral characteristics and performance to determine the expected collateral loss or a range of expected collateral losses or cash flows to the rated instruments. As a second step, Moody's estimates expected collateral losses or cash flows using a quantitative tool that takes into account credit enhancement, loss allocation and other structural features, to derive the expected loss for each rated instrument.

Moody's did not use any stress scenario simulations in its analysis.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.

At least one ESG consideration was material to the credit rating action(s) announced and described above.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Amy Wang
Associate Lead Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Romina Padhi
VP - Senior Credit Officer
Structured Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH  CURRENT OPINIONS. MOODY'S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND  OTHER OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES  ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

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Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy."

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MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

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