DBRS Confirms Ratings of JPMBB Commercial Mortgage Securities Trust 2014-C26, Stable Trends

DBRS Limited (DBRS) has today confirmed the ratings for all classes of Commercial Mortgage Pass-Through Certificates, Series 2014-C26 (the Certificates), issued by JPMBB Commercial Mortgage Securities Trust (the Trust) 2014-C26 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-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 (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 (sf)

All trends are Stable. DBRS does not rate the first loss piece, Class NR.

The rating confirmations reflect that the transaction’s current performance remains stable. The collateral consists of 69 fixed-rate loans secured by 93 commercial properties. As of the November 2016 remittance, all 69 loans remain in the pool, with an aggregate outstanding principle balance of approximately $1.45 billion, representing a collateral reduction of 0.8% since issuance due to scheduled loan amortization. The pool is concentrated with loans secured by office properties (46.6% of the pool), but there is also a concentration of multifamily (16.7% of the pool), hotel (16.2% of the pool) and retail (15.5% of the pool) property types. Six loans (12.5% of the pool) are structured with full interest-only (IO) terms, while an additional 18 loans (31.7% of the pool) have partial IO periods remaining, ranging from 11 months to 37 months. To date, 42 loans (61.0% of the pool) have reported partial-year 2016 net cash flow (NCF) figures, while the remaining 27 loans (39.0% of the pool) reported YE2015 NCFs. According to the YE2015 NCFs, the transaction had a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 1.70x and 10.0%, respectively, compared with the DBRS UW figures of 1.49x and 8.4%, respectively.

Based on the most recent cash flow reporting (ranging from YE2015 through partial-year 2016 financials), the Top 15 loans reported a WA DSCR of 2.08x, compared with the DBRS UW figure of 1.46x, reflective of a WA amortizing net cash flow (NCF) growth of 29.0%. There is one loan in the Top 15, the United Healthcare Office loan (Prospective ID#9, 2.9% of the pool), exhibiting a 4.7% NCF decline when compared with the DBRS UW figure. The loan is secured by a 204,123 square foot (sf) single-tenant office building located in Las Vegas, Nevada. The sole tenant, United Healthcare Services Inc. (UHS), signed a new lease at origination extending through December 2025, and was reportedly planning to spend approximately $9.3 million on renovations throughout the subject. According to the servicer, all six floors were fully renovated and completed in June 2016.

As of the November 2016 remittance, there are no loans in special servicing and five loans (5.2% of the pool) on the servicer’s watchlist. Two of these loans, the Hilton Garden Inn Westampton (Prospectus ID#37, 0.9% of the pool) and the Lakeshore – Summit Village/Blue Coral MHC Portfolio loan (Prospectus ID#68, 0.2% of the pool) were flagged because of performance-related reasons. As of the YE2015 financials, these loans reported a WA DSCR of 0.86x, compared to the DBRS UW figure of 1.46x, reflective of a WA amortizing NCF decline of 41.0%.

The rating assigned to Classes F materially deviates from the higher rating implied by the quantitative model. DBRS considers a material deviation to be a rating differential of three or more notches between the assigned rating and the rating implied by the quantitative model that is a substantial component of a rating methodology; in this case, the assigned rating reflects the sustainability of loan performance trends not demonstrated.

DBRS has provided updated loan-level commentary and analysis for larger and/or pivotal watchlisted and specially serviced loans, as well as for the largest 15 loans in the pool, in the DBRS CMBS IReports platform. To view these and future loan-level updates provided as part of DBRS’s ongoing surveillance for this transaction, please log into DBRS CMBS IReports, www.ireports.dbrs.com.

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 methodologies are North American CMBS Rating Methodology (March 2016) and CMBS North American Surveillance (December 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.