DBRS Confirms Ratings of WFRBS Commercial Mortgage Trust 2014-C20

DBRS Limited (DBRS) has today confirmed all classes of Commercial Mortgage Pass-Through Certificates, Series 2014-C20 (the Certificates) issued by Wells Fargo Commercial Mortgage Trust 2014-C20 as follows:

-- 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 A-SFL at AAA (sf)
-- Class A-SFX 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 (low) (sf)
-- Class F at B (low) (sf)

All trends are Stable. DBRS does not rate the first loss piece, Class G. The Class A-SFX certificates are exchangeable with Class A-SFL certificates (and vice versa).

The rating confirmations reflect that the current performance of the transaction remains in line with DBRS expectations at issuance in May 2014. The collateral consists of 98 fixed-rate loans secured by 142 commercial properties. As of the February 2015 remittance, the pool has an aggregate balance of approximately $1.24 billion, representing a collateral reduction of approximately 0.7% since issuance as a result of scheduled loan amortization. The pool is diverse based on loan size, as the largest 15 loans only account for 56.3% of the current pool balance. However, the pool is concentrated by property type, as 19 loans, representing 18.3% of the current pool balance, are secured by hotel properties, three of which are in the top 15.

At issuance, DBRS shadow-rated two loans, Rockwell – ARINC HQ (Prospectus ID#5, 3.91% of the current pool balance) and Savoy Retail & 60th Street Residential (Prospectus ID#9, 2.82% of the current pool balance) as investment grade. DBRS has today confirmed that the performance of these loans is consistent with investment-grade loan characteristics.

As of the February 2015 remittance report, there are four loans on the servicer’s watchlist, representing 1.7% of the current pool balance. The largest loan on the servicer’s watchlist is highlighted below.

Parkway Corporate Center (Prospectus ID#36, 0.81% of the current pool) is secured by a 94,172-squre foot (sf) office building located in Montvale, New Jersey. The building was constructed in 1976 and renovated during 2007. The loan was placed on the servicer’s watchlist as a result of the upcoming lease expiration and ultimate departure of the former largest tenant. According to the servicer, Ingersoll-Rand Services Company (Ingersoll-Rand), which occupied 61,371 sf (61.75% of the net rentable area (NRA)), vacated its space upon lease expiration on February 28, 2015. At issuance, DBRS was aware that Ingersoll-Rand would be vacating, as a portion of its space was dark and the rest had been sublet. Two current tenants, SRS Software, LLC (42.5% of the NRA) and Taiki USA (7.9% of the NRA), which formerly subleased space at the subject, have signed five-year direct leases at the subject for formerly subleased space totaling 41.7% of the NRA. Additionally, Leading Pharma (4.3% of the NRA) has signed a new lease at the subject as well. Taiki USA will receive two months of rental abatement totaling $27,740. Beginning March 2015, the property is expected to be 84.5% occupied with an average rental rate of $23.64 per sf compared with $23.78 per sf at issuance. As of Q3 2014, the loan had an annualized debt service coverage ratio of 2.75 times.

The DBRS analysis included an in-depth review of the 15 largest loans in the transaction, as well as the loans on the servicer’s watchlist, which collectively represent 58.0% of the current pool balance.

DBRS continues to monitor this transaction in its Monthly CMBS Surveillance Report, with additional information on the DBRS viewpoint for this transaction, including details on the largest loans in the pool. The February 2015 Monthly Surveillance Report for this transaction will be published shortly. If you are interested in receiving this report, contact us at info@dbrs.com.

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

The applicable methodologies are CMBS Rating Methodology (January 2012) and CMBS North American Surveillance (January 2015), which can be found on our website under Methodologies.

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