DBRS Confirms All Classes of COMM 2014-TWC Mortgage Trust

DBRS Limited (DBRS) has today confirmed all classes of COMM 2014-TWC Mortgage Trust as follows:

-- Class A at AAA (sf)
-- Class X-CP at AAA (sf)
-- Class X-EXT at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class D BBB (low) (sf)
-- Class E BB (low) (sf)
-- Class F at B (sf)

All trends are Stable.

The rating confirmations reflect the current performance of the transaction. This transaction originally closed in February 2014, consisting of the fee interest in two office condominium units totaling 1.1 million square feet (sf) within a larger 2.86 million sf Class A mixed-use complex in Manhattan, New York. The subject consists of a South and North Tower with the collateral located on 19 floors in the South Tower and six floors in the North Tower. Considered to be a trophy-quality Class A office property, it is located on the southwest corner of Central Park, which provides all tenants views of the park. The complex offers the Shops at Columbus Circle, providing complimentary shops and restaurants. As the property was built 13 years ago in 2003, the building is in excellent condition and provides highly efficient, modern office space for high-end users.

The property is currently 100% occupied by Time Warner Realty Inc. (Time Warner Realty) and Time Warner Cable; however, Time Warner Realty, which occupies 87.6% of the net rentable area (NRA), will vacate the subject at lease expiry in January 2019, ahead of the fully extended loan maturity date in February 2020. Time Warner Realty’s ultimate departure from the subject was known at issuance and the loan is structured with an ongoing cash trap to be used as a future leasing reserve. DBRS has contacted the servicer for an update on the current reserve balance and is awaiting response. By the time Time Warner Realty’s lease matures, the reserve is projected to have a balance of $67.1 million. Time Warner Inc., which is rated investment grade, guarantees the Time Warner Realty lease. The remaining 12.4% of NRA is occupied by Time Warner Cable, which has a lease expiration in December 2016 with three five-year renewal options remaining. It is unknown at this time whether Time Warner Cable will be vacating at lease expiry. The average rental rate per square foot (psf) for the collateral is $75.59. According to CoStar, for the Columbus Circle submarket, the average rental rate for Class A office buildings is $64.00 psf. DBRS considers the subject to be a superior physical product with superior views as compared to many of the competitors in the submarket.

The loan served as acquisition financing for the loan sponsors The Related Companies, L.P. (Related), Government of Singapore Investment Corporation and Abu Dhabi Investment Authority, which acquired the subject for $1.31 billion. Including closing costs, there remained $669 million of cash equity behind the $675 million mortgage loan. Sponsorship is considered strong as all three sponsors have significant financial resources. In addition, Related has extensive experience and knowledge of the market as a commercial real estate developer and operator in Manhattan.

Given the excellent location, loan structural features and experience of the sponsor, DBRS expects the property to continue to perform well despite upcoming tenant rollover.

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.