DBRS Confirms Ratings on COMM 2014-LC17 Commercial Mortgage Trust

DBRS Limited (DBRS) has today confirmed all classes of Commercial Mortgage Pass-Through Certificates, Series 2014-LC17 (the Certificates), issued by COMM 2014-LC17 Mortgage Trust as follows:

-- 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)

All trends are Stable. DBRS does not rate the first loss piece, Class H. The Class PEZ certificates are exchangeable with the Class A-M, Class B and Class C certificates (and vice versa).

The rating confirmations reflect that the transaction’s current performance has remained in line with expectations since issuance in September 2014. The pool consists of 71 fixed-rate loans secured by 207 commercial and multifamily properties. As of the June 2015 remittance, the pool has an aggregate outstanding balance of $1.22 billion, representing a collateral reduction of approximately 0.6% since issuance as a result of scheduled loan amortization. The transaction benefits from loans secured by properties located within urban and suburban markets, representing 32.7% and 49.2% of the current pool balance, respectively. As of the June 2015 remittance, there are no loans in special servicing and three loans on the servicer’s watchlist, representing 1.5% of the current pool balance.

The largest loan, Sky Park (Prospectus ID#38, 0.8% of the current pool balance) is secured by an 85,053 sf office building located in San Diego, California. The loan was added to the watchlist in June 2015 due to a low debt service coverage ratio (DSCR) of 1.03 times (x). According to the servicer, income has declined by 28% since issuance as a result of a decline in base rents and the increase in vacancy. As of the December 2014 rent roll, the property was 87.8% occupied with an average rental rate of $21.90 psf. Two tenants, San Diego State Research Foundation (9.8% NRA) and Iron Mountain Information Management (5.7% NRA) had original lease expiration dates as of September 2015 and June 2015, respectively. Iron Mountain has occupied its space since 2006, but has no extension options. The servicer has not confirmed if the tenant has renewed its lease or vacated upon lease expiration. DBRS has contacted the servicer regarding leasing updates and the decline in income.

DBRS continues to monitor this transaction in its Monthly CMBS Surveillance Report, with additional information on the DBRS viewpoint for this transaction. The June 2015 Monthly CMBS 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 related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

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

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

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.