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Rating Action:

Moody's affirms eight classes UBSCM 2018-C12

19 Oct 2020

Approximately $625 million of structured securities affected

New York, October 19, 2020 -- Moody's Investors Service, ("Moody's") has affirmed the ratings on eight classes in UBS Commercial Mortgage Trust 2018-C12, Commercial Mortgage Pass-Through Certificates, Series 2018-C12:

Cl. A-1, Affirmed Aaa (sf); previously on Aug 29, 2018 Definitive Rating Assigned Aaa (sf)

Cl. A-2, Affirmed Aaa (sf); previously on Aug 29, 2018 Definitive Rating Assigned Aaa (sf)

Cl. A-3, Affirmed Aaa (sf); previously on Aug 29, 2018 Definitive Rating Assigned Aaa (sf)

Cl. A-4, Affirmed Aaa (sf); previously on Aug 29, 2018 Definitive Rating Assigned Aaa (sf)

Cl. A-5, Affirmed Aaa (sf); previously on Aug 29, 2018 Definitive Rating Assigned Aaa (sf)

Cl. A-SB, Affirmed Aaa (sf); previously on Aug 29, 2018 Definitive Rating Assigned Aaa (sf)

Cl. A-S, Affirmed Aa2 (sf); previously on Aug 29, 2018 Definitive Rating Assigned Aa2 (sf)

Cl. X-A*, Affirmed Aaa (sf); previously on Aug 29, 2018 Definitive Rating Assigned Aaa (sf)

* Reflects interest-only classes

RATINGS RATIONALE

The ratings on the seven 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 the rated IO class was affirmed based on the credit quality of its referenced class.

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 8.3% of the current pooled balance. Moody's base expected loss plus realized losses is now 8.2% of the original pooled balance. 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 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 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 *). Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

DEAL PERFORMANCE

As of the September 15, 2020 distribution date, the transaction's aggregate certificate balance has decreased by 1.0% to $796.8 million from $804.9 million at securitization. The certificates are collateralized by 65 mortgage loans ranging in size from less than 1% to 6.3% of the pool, with the top ten loans (excluding defeasance) constituting 40.2% of the pool. Three loans, constituting 10.5% of the pool, have an investment-grade structured credit assessment.

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 38, unchanged from securitization.

As of the September 2020 remittance report, loans representing 78.0% were current or within their grace period on their debt service payments, 8.0% were passed their grace period but less than 1 month, 3.0% were between 30-59 days delinquent and 11.0% were 60 or more days delinquent.

In total there are 15 loans, constituting 31.1% of the pool, that currently are on the master servicer's watchlist. 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 there have been no realized losses to the trust. Six loans, constituting 5.8% of the pool, are currently in special servicing. Five of the specially serviced loans, representing 4.2% of the pool, have transferred to special servicing since March 2020.

The largest specially serviced loan is the Holiday Inn Matteson ($13.0 million -- 1.6% of the pool), which is secured by the borrower's fee simple interest in a 202-unit full-service hotel originally constructed in 1984, and extensively renovated in 2012. The loan transferred to special servicing due to payment default in October 2019 and the borrower was also in default under the Franchise agreement due to failure to comply with a PIP and necessary immediate repairs. Through year-end 2019, the property's performance had declined since securitization due to decline in revenue per available room (RevPAR). This asset is directly adjacent to a Holiday Inn Conference Center which historically was a revenue generator for the subject, however, the hotel's performance has been severely impacted by the coronavirus pandemic. For the 6-month period ending June 2020, the occupancy and RevPAR were 28.68% and $23.06, respectively, and the property had reported a negative net operating income (NOI). The loan is last paid through its March 2020 payment date the special servicer is currently evaluating disposition strategies.

The second largest specially serviced loan is the 5th Street Station Loan, 1.1% of the pool, which is described in more detail below, and is currently assigned an investment grade structured credit assessment due to its low leverage.

The remaining four specially serviced loans each represent less than 1% of the pool and are secured by two hotel properties and two single tenant retail properties. The two single tenant retail properties are leased to 24 Hour Fitness which have been impacted by the tenant's June 2020 bankruptcy filing.

Moody's has also assumed a high default probability for four poorly performing loans, constituting 7.4% of the pool, all of which are secured by hotel properties. The largest loan troubled loan is the Aspect RHG Hotel Portfolio, representing 4.2% of the pool, which is secured the borrower's fee simple interest in a portfolio of four limited-service hotels totaling 461 guestrooms and located across the following three states: Tennessee (two properties, 42.3% of rooms and 51.4% of allocated loan amount (ALA)), Colorado (one property, 30.2% of rooms and 27.2% of ALA) and Arizona (one property, 27.5% of rooms and 21.3% of ALA). Through year-end 2019, the portfolio's performance was significantly below securitization levels due to lower room revenue. The portfolio's performance has been further impacted due to the coronavirus pandemic and the year-to-date June 2020 NOI DSCR was below 0.25X. The loan is on the master servicer's watchlist due to the borrower's request for COVID-19 related relief and low DSCR. The loan was 60 days past due as of the September remittance statement and the servicer is working with the Borrower toward a possible relief solution.

The second largest troubled loan is the Stay Bridge Suites (1.4% of the pool), which had also suffered declining performance through year-end 2019. Furthermore, the Hampton Inn Provo and Holiday Inn Express Savannah; were reported as 60- and 30-days delinquent as of the September 2020 remittance statement.

Moody's has estimated an aggregate $19.3 million loss (20% on average) for the specially serviced (excluding the 5th Street Station loan) and troubled loans.

Moody's received full year 2019 operating results for 96% of the pool, and partial year 2020 operating results for 37% of the pool (excluding specially serviced and defeased loans). Moody's weighted average conduit LTV is 121%, compared to 118% at Moody's securitization. Moody's conduit component excludes loans with structured credit assessments, defeased and CTL loans, and specially serviced and troubled loans. Moody's value reflects a weighted average capitalization rate of 10.0%.

Moody's actual and stressed conduit DSCRs are 1.41X and 0.91X, respectively, compared to 1.47X and 0.96X at securitization. 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 largest loan with a structured credit assessment is the Wyvernwood Apartments Loan ($50 million -- 6.3% of the pool), which represents a pari passu interest in a $78.0 million senior mortgage loan. The loan is secured by a 1,175-unit garden style multifamily community located on a 63.07-acre site in Los Angeles, CA. This asset operates subject to the City of Los Angeles Rent Stabilization Ordinance (RSO). The loan's capital structure includes $77 million of mezzanine financing held outside the trust. The property was 98.4% occupied per the June 2020 rent roll with average rental rates of $1,276 per unit. Through year-end 2019 the property's performance have improved since securitization. The loan is interest only for its entire 5-year term and remains current as of its September 2020 remittance date. Moody's structured credit assessment and stressed DSCR are baa2 (sca.pd) and 1.30X, respectively.

The second structured credit assessment asset is the 20 Times Square Loan ($25 million - 3.1% of the pool, which represents a pari passu interest in a $265 million senior mortgage loan. The property is also encumbered with $485.0 million of B-note and $150.0 million of mezzanine debt. The loan is secured by the borrower's fee simple interest in a 16,066 SF parcel of land located along Seventh Avenue and West 47th Street in Times Square, New York, NY. The non-collateral improvements above the property are encumbered with a 99-year ground lease with an initial ground rent of $29.25 million per annum, subject to a 2.0% annual increases in years 1- 5 and 2.75% annual increase thereafter. The non-collateral property consists of 74,820 SF of retail space, 18,000 SF of digital signage on 7th avenue and the 452 room hotel. While hotel and retail properties in Times Square have been significantly impacted by the coronavirus pandemic, the loan benefits from its ground lease priority and in the event of default of the ground lease, ownership of the improvements would revert to the borrower (ground lessor) and serve as collateral for the loan. Moody's structured credit assessment is aaa (sca.pd).

The third structured credit assessment loan is 5th Street Station. which represents a pari passu portion of a $45.0 million senior mortgage. The property is also encumbered with $38.3 million of B-note and $21.7 million of mezzanine debt. The loan is secured by the borrower's fee simple interest in a 451,727 SF grocery-anchored retail center located in Charlottesville, VA. The property is located 2.5 miles south of the University of Virginia campus and anchors include Wegman's, Dicks Sporting Goods and Alamo Drafthouse theatre. As of the June 2020 rent roll the property was 96% leased, compared to 95% in June 2019. Performance has declined due to the coronavirus pandemic and the loan transferred to special servicing for imminent default in June 2020. However, the borrower was able to come current on both the A and B note interest. The special servicer indicated they have approved a modification and is in the process of being documented. Moody's structured credit assessment and stressed DSCR are baa1 (sca.pd) and 1.61X, respectively.

The top three conduit loans represent 15.9% of the pool balance. The largest loan is the Riverfront Plaza ($49.8 million -- 6.1% of the pool), which represents a pari passu portion of a $141.9 million senior mortgage loan. The property is also encumbered with $25 million of mezzanine debt. The loan is secured by two, 21-story office towers totaling 949,875 SF and located in the central business district ("CBD") of Richmond, VA. Collateral for the loan also includes a five-story parking garage containing 2,172 parking spaces. The two largest tenants include Hunton & Williams LLP (25% of the NRA, lease expiration in June 2025) and BB&T Bank (15% of the NRA, lease expiration in August 2025). As of March 2020, the property was 87% leased, compared to 86% in June 2019 and 83% at securitization. The loan benefits from amortization and has amortized approximately 2.6% since securitization. Moody's LTV and stressed DSCR are 128% and 0.82X, respectively, compared to 132% and 0.80X at securitization.

The second largest loan is the Riverwalk Loan ($45 million -- 5.6% of the pool), which represents a pari passu interest in a $80.7 million loan. The loan is secured by four office/flex buildings totaling 630,379 SF and located within the Riverwalk development in Lawrence, MA, approximately 30 miles north of downtown Boston. The property's performance has declined since securitization due to lower occupancy and revenue. Moody's LTV and stressed DSCR are 140% and 0.77X, respectively, compared to 133% and 0.81X at the last review.

The third largest loan is the 139 Ludlow Loan ($33.5 million -- 4.2% of the pool), which is secured by the borrower's fee simple interest in a four-story mixed use property operated as a private members club called "Ludlow House", located in the Lower East Side neighborhood of New York, NY. The property is 100.0% leased to Soho-Ludlow Tenant, LLC, a subsidiary of Soho House & Co Ltd. Soho House, under a 25-year triple net lease expiring in 2041. Founded in London during 1995, the lessee specializes in the operation of exclusive private members' clubs, hotels, restaurants, and spas worldwide. This asset also functions as a boutique hotel, with rooms available for short term stays for both members and non-members; rooms are not available for short stay through the end of November 2020. This asset was temporarily on the master servicer watchlist due to a COVID-19 related relief request, which has subsequently been cancelled. Moody's LTV and stressed DSCR are 142% and 0.67X, unchanged since securitization.

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.

Ashton Khan
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

Matthew Halpern
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.
© 2021 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 CREDIT RATINGS AFFILIATES ARE THEIR 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 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 APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S 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 $5,000,000. 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.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

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