DBRS Assigns Provisional Ratings to JPMBB 2014-C25 Commercial Mortgage Trust

DBRS has today assigned provisional ratings to the following classes of Commercial Mortgage Pass-Through Certificates, Series 2014-C25 (the Certificates), to be issued by JPMBB 2014-C25 Mortgage Trust. The trends are Stable.

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4A1 at AAA (sf)
-- Class A-4A2 at AAA (sf)
-- Class A-5 at AAA (sf)
-- Class A-SB 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-NR at AAA (sf)
-- Class A-S at AAA (sf)
-- Class B at AA (high) (sf)
-- Class C at A (high) (sf)
-- Class EC at A (high) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (sf)
-- Class F at B (high) (sf)

Classes A-4A2, X-C, X-D, X-E, X-F, X-NR, D, E and F 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-S, Class B and Class C certificates may be exchanged for Class EC certificates. Class EC certificates may be exchanged for up to the full certificate balance of the Class A-S, Class B and Class C certificates.

The collateral consists of 65 fixed-rate loans secured by 157 commercial and multifamily properties, with a transaction balance of $1,184,302,812. The DBRS sample included 30 loans, representing 73.2% of the pool. Term default risk is moderate, as indicated by a strong DBRS Term DSCR of 1.60x. Only four loans, representing 6.9% of the pool, have properties that are leased to single tenants, the largest of which represents 4.4% of the pool (Spectra Energy Headquarters). Overall, the pool is relatively diverse based on loan size, with a concentration profile equivalent to that of a pool of 30 equal-sized loans. Increased pool diversity helps to insulate the higher-rated classes from event risk.

The pool exhibits a high concentration of loans with elevated refinance risk. Twenty-nine loans, representing 50.6% of the pool, have DBRS Refi DSCRs below 1.00x. Twelve of these loans, representing 27.8% of the pool, have DBRS Refi DSCRs less than 0.90x. However, these DSCRs are based on a weighted-average stressed refinance constant of 9.8%, which implies an interest rate of 9.3%, amortizing on a 30-year schedule. This represents a significant stress of more than 4.8% over the weighted-average contractual interest rate of the loans in the pool. In addition, the combined partial IO and full-term IO concentration amounts to 74.2% of the total pool. There are seven loans that are IO for the full term, representing 19.3% of the pool, including three of the five largest loans in the pool. This in turn results in a relatively low level of total pool amortization during the loan term of -10.6%. Furthermore, DBRS determines POD based on the lower of term or refinance DSCR, and loans that lack amortization are treated more punitively.

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.