DBRS Assigns Provisional Ratings to COMM 2014-LC17 Mortgage Trust

DBRS has today assigned provisional ratings to the following classes of Commercial Mortgage Pass-Through Certificates, Series 2014-LC17 (the Certificates), to be issued by COMM 2014-LC17 Mortgage Trust. The trends are Stable.

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

Classes X-B, X-C, X-D, X-E, X-F, X-G, D, E, F and G will be privately placed pursuant to Rule 144A. The Class X balances are notional. DBRS ratings on interest-only (IO) certificates address the likelihood of receiving interest based on the notional amount outstanding. DBRS considers the IO certificates’ position within the transaction payment waterfall when determining the appropriate rating.

Up to the full certificate balance of the Class A-M, Class B and Class C certificates may be exchanged for Class PEZ certificates. Class PEZ certificates may be exchanged for up to the full certificate balance of the Class A-M, Class B and Class C certificates.

The collateral consists of 71 fixed-rate loans secured by 207 commercial properties, for a total transaction balance of $1,235,960,696. The DBRS sample included 28 loans, representing 70.0% of the pool. The pool is relatively diverse based on loan size, with a concentration profile equivalent to that of a pool of 27 equal-sized loans, despite the largest loan representing 9.7% of the pool. Increased pool diversity helps to insulate the higher-rated classes from event risk. Properties located in urban markets represent only 12.5% of the pool, which is below transactions seen in the recent past that typically have urban concentrations of 15.0% to 20.0%, and have increased liquidity. Term default risk is moderate, as indicated by a strong DBRS Term DSCR of 1.57x. In addition, 25 loans, representing 44.1% of the pool, have a DBRS Term DSCR in excess of 1.50x, including five of the top ten loans.

The deal consists of 26 properties, totaling 10.9% of the pool, leased to single tenants, which have been found to have higher losses in the event of default. DBRS modeled single-tenant properties with a higher expected loss compared with multi-tenant properties. Additionally, none of the single-tenant properties in the pool are considered to be overly specialized in such a manner that would make it difficult to re-lease the space to another user. The transaction has a moderate concentration of loans exhibiting elevated refinance risk, with 31 loans, representing 42.0% of the pool, having a DBRS Refi DSCR below 1.00x and 17 loans, representing 26.6% of the pool, having a DBRS Refi DSCR below 0.90x. These DSCRs are based on a weighted-average stress refinance constant of 9.8%, which implies an interest rate of 9.2%, amortizing on a 30-year schedule. This represents a significant stress of 4.6% over the weighted-average contractual interest rate of the loans in the pool.

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.