DBRS Assigns Provisional Ratings to Wells Fargo Commercial Mortgage Trust 2014-LC16

DBRS has today assigned provisional ratings to the following classes of Commercial Mortgage Pass-Through Certificates, Series 2014-LC16 (the Certificates), to be issued by Wells Fargo Commercial Mortgage Trust 2014-LC16. The trends are Stable.

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-5 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class X-C at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (sf)
-- Class F at B (sf)

Classes D, E, F and X-C will be privately placed pursuant to Rule 144A.

Classes X-A, X-B and X-C balances are notional. DBRS ratings on interest-only certificates address the likelihood of receiving interest based on the notional amount outstanding. DBRS considers the interest-only certificates’ positions within the transaction payment waterfall when determining the appropriate ratings.

The collateral consists of 82 fixed-rate loans secured by 184 commercial and multifamily properties. The transaction has a balance of $974,069,228. The pool consists of relatively moderate financing, with a weighted-average DBRS Refi DSCR of 1.13 times, based on a weighted-average stressed refinance constant of 9.83%. The DBRS sample included 36 loans, representing 73.0% of the pool. Of the sampled loans, properties securing three loans (all in the top five) were considered to have Excellent or Above Average property quality and no properties were deemed to have Below Average property quality. DBRS considers the pool to be diverse based on loan size, with a concentration profile equivalent to a pool of 34 equal-sized loans.

A total of 25 loans, representing 42.6% of the pool, are secured by retail properties, including five loans in the top 15. DBRS classified 79.7% of the retail concentration as either a regional mall or anchored retail. These retail outlets are predominantly located in established suburban markets, with the largest two loans Woodbridge Center and Montgomery Mall (combined 17.9% of the pool) owned and managed by strong national mall operators. Nine loans, representing 11.8% of the pool, have sponsorship and/or loan collateral that have had a voluntary bankruptcy filing, limited liquidity or other historical negative credit event. In order to account for this, DBRS increased the probability of default for loans with identified sponsorship concerns. Additionally, 27 loans, representing 56.3% of the pool have full or partial interest-only periods, although the transaction’s scheduled amortization by maturity at -13.5% is considered reasonable and in line with other recent transactions

The ratings assigned to the Certificates by DBRS are based exclusively on the credit provided by the transaction structure and underlying trust assets. All classes will be subject to ongoing surveillance, which could result in upgrades or downgrades by DBRS after the date of issuance.

Notes:
All figures are in U.S. dollars unless otherwise noted.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodology is CMBS Rating Methodology, which can be found on our website under Methodologies.

The Rule 17g-7 Report of Representations and Warranties is hereby incorporated by reference and can be found by clicking on the link to the right under Other Research or by contacting us at info@dbrs.com.