UBS Commercial Mortgage Trust 2018-C8: 2025 Annual Performance Review

Understanding the performance of your investments is crucial. This report provides a clear, accessible summary of the UBS Commercial Mortgage Trust 2018-C8's annual performance for 2025, cutting through financial jargon to highlight key insights for investors.

1. Business Overview

Launched in 2018, UBS Commercial Mortgage Trust 2018-C8 operates as an investment trust. Think of it as a large, diversified basket holding 100 commercial mortgage loans with an original balance of $1.2 billion. The trust provided these loans to businesses for properties such as office buildings, shopping centers, and apartment complexes across various U.S. regions.

When investing in this trust, investors buy "certificates"—different slices (or tranches) of the trust, each with its own risk and return profile. This bond-style investment aims to provide steady payments, which come from the underlying mortgage payments, rather than from equity in a company.

2. Financial Performance

This report covers the trust's performance through its seventh year of operation, for the year ended December 31, 2025. Here's a breakdown of the key insights:

• Current Portfolio Snapshot: As of December 31, 2025, the trust's outstanding loan balance totaled approximately $985 million. This reduction from its original $1.2 billion is due to scheduled principal payments and loan payoffs. The portfolio now consists of 92 loans, featuring a Weighted Average Coupon (WAC) of 4.85% and a weighted average remaining maturity of 3.5 years.
• Income & Distributions: For the year, the trust generated $47.8 million in gross interest income. After deducting servicing fees, trustee fees, and other administrative expenses totaling $3.2 million, net income available for distribution was $44.6 million. While senior certificate holders generally received expected distributions, some lower-rated tranches experienced minor shortfalls due to increased special servicing costs.
• Loan Performance & Delinquencies: The overall health of the loan pool remains largely stable, but emerging pressures are evident. The 30-day delinquency rate increased slightly to 1.8% (from 1.2% last year), primarily due to challenges in the office sector. The 60-day and 90-day+ delinquency rates remained steady at 0.5% and 0.2%, respectively.
• Special Servicing Activity: The trust currently holds five loans, totaling $65 million (6.6% of the current balance), in special servicing. These include two office properties facing lease rollovers and declining occupancy rates, and one retail property affected by tenant bankruptcies. The special servicer actively pursues workout strategies, including loan modifications and potential foreclosure for one severely distressed asset.
• Realized Losses: The trust recorded $4.5 million in realized losses during 2025, primarily from resolving a previously foreclosed retail property that sold below its outstanding loan balance.

3. Risk Factors

• No Single Borrower Concentration: No single borrower accounts for more than 5% of the current outstanding balance, which mitigates concentration risk. The top 5 loans represent 18% of the pool, and while generally performing, one of these (an office property in Chicago) is closely monitored due to upcoming lease expirations.
• No External Credit Enhancements: The trust does not rely on external credit enhancements (like insurance policies) or complex financial instruments (derivatives). Therefore, investment performance directly reflects the underlying mortgage loans.
• Property Type & Geographic Exposure: The portfolio has its largest exposures in multifamily (35%) and office (28%) properties, followed by retail (15%) and industrial (12%). Geographically, California (18%), New York (15%), and Texas (10%) are the largest concentrations. Continued concerns exist in the office sector due to remote work trends, while multifamily and industrial sectors demonstrate resilience.
• Maturity Risk: $180 million (18.3%) of loans are scheduled to mature in 2026 and 2027. The refinancing environment, particularly for office properties, poses a key risk due to higher interest rates and tighter lending standards.
• Legal Status: The trust faces no material lawsuits, a positive indicator of operational stability.

4. Management Discussion (MD&A Highlights)

The annual report provides insights into the trust's operational and financial condition, overseen by its key servicers. Midland Loan Services continues as the Master Servicer, handling day-to-day loan management and payment collection, and confirmed full compliance with Regulation AB servicing criteria for 2025. Wells Fargo Bank, N.A. serves as the Trustee and Certificate Administrator, overseeing the trust's operations and distributions. CWCapital Asset Management serves as the Special Servicer, managing distressed loans.

The servicers acknowledge the challenging interest rate environment and its impact on commercial real estate values, particularly for office assets. They reported mixed financial performance, noting increased 30-day delinquency rates and a rise in special servicing activity, particularly for office and retail properties. The trust recorded $4.5 million in realized losses during 2025, primarily from resolving a previously foreclosed retail property. These trends indicate increasing pressure on the underlying collateral, necessitating active management by the special servicer to mitigate potential future losses. The report emphasizes the direct link between underlying mortgage loan performance and distributions to certificate holders, given the absence of external credit enhancements.

5. Financial Health (Debt, Cash, and Liquidity)

As of December 31, 2025, the trust's outstanding loan balance, which represents the primary asset and, from the perspective of the underlying mortgages, the outstanding debt, was approximately $985 million. The trust primarily derives its liquidity from the timely collection of principal and interest payments on the underlying mortgage loans. Net income available for distribution to certificate holders totaled $44.6 million for the year. The trust maintains operational cash flow to cover servicing, trustee, and other administrative expenses.

6. Future Outlook

The servicers acknowledge the challenging interest rate environment and its impact on commercial real estate values, particularly for office assets. Their strategy for 2026 focuses on:

• Proactive engagement with borrowers of loans maturing in the next 18 months to assess refinancing viability.
• Intensive management of special serviced loans, aiming for resolutions that maximize recovery for certificate holders.
• Close monitoring of property-level performance metrics, especially in vulnerable sectors.

The upcoming "maturity wall" in 2026-2027, with $180 million of loans scheduled to mature, presents a significant refinancing risk that will heavily influence future performance. Investors should closely monitor delinquency and special servicing rates, the resolution outcomes of specially serviced loans, and the refinancing success rate of near-term maturing loans.

7. Competitive Position

As a Commercial Mortgage Trust (a securitization vehicle), UBS Commercial Mortgage Trust 2018-C8 does not operate as a traditional competitive business. Therefore, a discussion of its competitive position is not applicable.

In Summary: What This Means for Investors

UBS Commercial Mortgage Trust 2018-C8 demonstrated generally stable performance in 2025, with senior certificate holders receiving expected distributions. However, the report reveals increasing pressure from rising delinquencies, particularly in the office sector, and notable increases in special servicing activity and realized losses. The upcoming "maturity wall" in 2026-2027 presents a significant refinancing risk that will heavily influence future performance.

Investors should closely monitor:

• Delinquency and special servicing rates, especially for office and retail properties.
• Resolution outcomes of specially serviced loans and any further realized losses.
• The refinancing success rate of loans maturing in the near term.

While operational management remains sound, the financial performance of the underlying loans, particularly in specific property sectors, will primarily drive future returns for this seasoned trust.