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Rating Action:

Moody's affirms seven classes of UBS 2017-C4

17 Mar 2020

Approximately $609 million of structured securities affected

New York, March 17, 2020 -- Moody's Investors Service, ("Moody's") has affirmed the ratings on seven classes in UBS Commercial Mortgage Trust 2017-C4, Commercial Mortgage Pass-Through Certificates, Series 2017-C4 as follows:

Cl. A-1, Affirmed Aaa (sf); previously on Oct 17, 2018 Affirmed Aaa (sf)

Cl. A-2, Affirmed Aaa (sf); previously on Oct 17, 2018 Affirmed Aaa (sf)

Cl. A-3, Affirmed Aaa (sf); previously on Oct 17, 2018 Affirmed Aaa (sf)

Cl. A-4, Affirmed Aaa (sf); previously on Oct 17, 2018 Affirmed Aaa (sf)

Cl. A-S, Affirmed Aa3 (sf); previously on Oct 17, 2018 Affirmed Aa3 (sf)

Cl. A-SB, Affirmed Aaa (sf); previously on Oct 17, 2018 Affirmed Aaa (sf)

Cl. X-A*, Affirmed Aaa (sf); previously on Oct 17, 2018 Affirmed Aaa (sf)

* Reflects interest-only classes

RATINGS RATIONALE

The ratings on six 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 IO class was affirmed based on the credit quality of its referenced classes.

Moody's rating action reflects a base expected loss of 5.7% of the current pooled balance, compared to 5.3% at Moody's last review. Moody's base expected loss plus realized losses is now 5.5% of the original pooled balance, compared to 5.3% 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 interest-only classes was "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in July 2017. The methodologies used in rating interest-only classes were "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in July 2017 and "Moody's Approach to Rating Structured Finance Interest-Only (IO) Securities" published in February 2019. Please see the list of ratings at the top of this announcement to identify which classes are interest-only (indicated by the *). Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

DEAL PERFORMANCE

As of the February 18, 2020 distribution date, the transaction's aggregate certificate balance has decreased by 2% to $801 million from $818 million at securitization. The certificates are collateralized by 49 mortgage loans ranging in size from less than 1% to 6% of the pool, with the top ten loans (excluding defeasance) constituting 45% of the pool. Four loans, constituting 13% of the pool, have investment-grade structured credit assessments.

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 32, compared to 33 at Moody's last review.

Six loans, constituting 10% of the pool, 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.

There have been no loans liquidated from the pool. One loan, the Floor & Decor / Garden Fresh Market loan ($12.5 million -- 1.6% of the pool), is currently in special servicing. The loan is secured by a 74,900 square foot (SF), Floor & Décor located in Arlington Heights, Illinois and a 98,921 SF Garden Fresh Market located in Mundelein, Illinois. The properties are 100% leased by their respective tenants through 2032. The loan transferred to special servicing in February 2018 for non-monetary default. The loan remains current and has been included in the conduit metrics.

Moody's received full year 2018 operating results for 100% of the pool, and full or partial year 2019 operating results for 80% of the pool (excluding specially serviced and defeased loans). Moody's weighted average conduit LTV is 122%, compared to 120% 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 19% 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 1.47X and 0.91X, respectively, compared to 1.50X and 0.92X 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 largest loan with a structured credit assessment is the 237 Park Avenue Loan ($50 million -- 6.2% of the pool), which represents a pari passu portion of a $348 million senior mortgage loan. Additionally, the property is also encumbered with $345.2 million in subordinate debt and $87.8 million in subordinated and non-pooled mezzanine interests. The loan is secured by the borrower's fee and leasehold condominium interests in a component of a 21-story, Class A office tower located in New York, NY. The 237 Park Avenue Property is a 21-story, 1.3 million SF Class A, office building. The building occupies the entire city block bound by Lexington Avenue and Park Avenue between 45th and 46th Streets in Midtown Manhattan adjacent to Grand Central Terminal. The collateral also includes rent generated by space leases as well as the assignment of the purchase money note and mortgage with installment payments similar to lease payments generated by NYPH (a tenant of the building). As of September 2019, the property was 99% leased compared to 95% in March 2018 and June 2017. The loan is interest only throughout the entire 10-year loan term. Moody's structured credit assessment and stressed DSCR are baa1 (sca.pd) and 1.41X, respectively.

The second loan with a structured credit assessment is the Park West Village Loan ($40 million -- 5.0% of the pool), which represents a pari passu portion of a $120 million senior mortgage loan. The property is also encumbered with $18.8 million of subordinate debt, and $186.3 million in mezzanine interests. The loan is secured by an 852-unit, high-rise multifamily complex located in New York, NY. The collateral improvements consist of three, 16-story apartment buildings situated upon a 1.59-acre site. The property was originally built in three phases between 1950 and 1963 and has undergone periodic updates since development. The sponsor has invested approximately $30.0 million ($35,211 per unit) in renovations since acquiring the subject in 2000. Most recently, the sponsor invested approximately $19.7 million ($23,097 per unit) in capital improvements. As of September 2019, the property was collectively 97% occupied compared to 96% in July 2017. The property contains approximately 424 market rate units and 428 rent-stabilized units. The loan is interest only throughout the entire 5-year loan term. Moody's structured credit assessment and stressed DSCR are a2 (sca.pd) and 1.25X, respectively.

The third loan with a structured credit assessment is the JW Marriott Chicago Loan ($10.8 million -- 1.3% of the pool), which represents a pari passu portion of a $79.3 million senior mortgage loan. The property is also encumbered with $124.2 million in subordinate debt and $66.5 million in mezzanine interests. The loan is secured by the borrower's condominium interest in a 610-guestroom, luxury hotel located in Chicago, IL. The borrower's condominium unit comprises part of a larger 22-story, mixed-use building that occupies a full city block in the Central Loop of the Chicago Central Business District (CBD). Collateral for the loan consists of the hotel that occupies the lobby level through the 12th floor, as well as two lower levels. For the trailing twelve month (TTM) ending October 2019, the property was 78.8% occupied with an average daily rate (ADR) of $269.20 compared to 76.3% and $277.55 as of October 2018. The loan is interest only throughout the entire 5-year loan term. Moody's structured credit assessment and stressed DSCR are a3 (sca.pd) and 1.97X, respectively.

The fourth loan with a structured credit assessment is the Del Amo Fashion Center Loan ($5.0 million -- 0.6% of the pool), which represents a pari passu portion of a $459.3 million senior mortgage. The property is also encumbered by $125.7 million in subordinate debt. The loan is secured by a 1.8 million SF component of a 2.5 million SF super-regional mall located in Torrance, California. The mall has undergone extensive renovations and additions across three separate yet interconnected property components. JC Penney and Nordstrom's ground leased parcels are part of the loan's collateral while Macy's and Sears are excluded. The property was 86% leased as of September 2019 compared to 88% in December 2017 and 85% at securitization. The loan is interest only throughout the entire 10-year loan term. Moody's structured credit assessment and stressed DSCR are baa1 (sca.pd) and 1.20X, respectively.

The top three conduit loans represent 16% of the pool balance. The largest loan is the Preston Hollow Loan ($48.3 million -- 6.0% of the pool), which is secured by the borrower's fee simple interest in a mixed-use, grocery anchored retail and office complex located in Dallas, TX, approximately seven miles north of the CBD. The collateral is comprised of two single-story retail buildings (Building A and B) and one three-story office/retail building (Building C). Building C features retail on the first floor and office space on the second and third floors. Building C also has an attached, multilevel parking garage with approximately 600 parking spaces. The property was built between 2013 and 2015, and is Phase-I of a five phase master planned development community called Preston Hollow Village, a 42-acre upscale mixed-use development in Dallas's Preston Hollow neighborhood. Phase two of the master plan component includes 600 apartments. As of September 2019, the property was 94% leased compared to 92% in July 2017. The loan is interest only throughout the entire 10-year loan term. Moody's LTV and stressed DSCR are 145% and 0.71X, respectively, the same as at the last review.

The second largest conduit loan is The District Loan ($38.5 million -- 4.8% of the pool), which represents a pari passu portion of a $76.9 million mortgage. The loan is secured by the borrower's fee simple interest in a 612,102 SF, open-air shopping center located in South Jordan, UT, which is approximately 22 miles south of the Salt Lake City CBD. The center is one of the largest mixed-use developments in Utah as the collateral improvements encompass three city blocks (68.2 acres). The property was developed by the Sponsor between 2006 and 2014 for a total cost of approximately $100.1 million. As of September 2019, the property was 89% leased, the same as in July 2017. The property is anchored by a 20-screen MegaPlex Theaters, Harmons, Hobby Lobby, Gordmans and Ross. Non-collateral shadow anchors include Target and JCPenney. The loan has amortized by over 3% and Moody's LTV and stressed DSCR are 122% and 0.88X, respectively, compared to 125% and 0.86X at the last review.

The third largest loan is the Embassy Suites - Brea Loan ($38.2 million -- 4.8% of the pool), which is secured by the borrower's leasehold interest in a 228-guestroom, full-service hotel located in Brea, CA, which is approximately 13 miles northeast of the Anaheim CBD and three miles north of California State University Fullerton. The hotel consists of a single eight-story atrium-style building. Common area guest amenities include a restaurant with seating for 80 customers as well as a breakfast area with seating for 130. For the TTM period ending October 2019, the property's occupancy rate and ADR were 88% and $179, respectively, equating to a RevPAR of $157. The loan was interest only through the initial 5-years and recently began to amortize. Moody's LTV and stressed DSCR are 113% and 1.05X, respectively, compared to 114% and 1.04X at the last review.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions of the disclosure form.

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.

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

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.

Fred Kasimov
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.

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