DBRS Confirms Ratings of COMM 2014-LC15 Mortgage Trust, Stable Trends

DBRS Limited (DBRS) has today confirmed the ratings for all classes of Commercial Mortgage Pass-Through Certificates, Series 2014-LC15 (the Certificates) issued by COMM 2014-LC15 Mortgage Trust (the Trust) as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class X-C at AAA (sf)
-- Class A-M at AAA (sf)
-- Class B at AA (sf)
-- Class PEZ at A (sf)
-- Class C at A (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (low) (sf)
-- Class F at B (sf)

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

The rating confirmations reflect that the transaction’s overall current performance remains stable. The collateral consists of 48 fixed-rate loans secured by 197 commercial properties. As of the January 2017 remittance, all 48 loans remain in the pool with an aggregate outstanding principal balance of approximately $903 million, representing a collateral reduction of 2.7% since issuance as a result of scheduled loan amortization. The pool is concentrated by loan size, as the Top 10 loans represent 62.5% of the current pool balance. Two loans (9.0% of the pool) are structured with full interest-only (IO) terms, while an additional six loans (23.3% of the pool) have partial IO periods remaining, ranging from one month to 26 months. To date, 36 loans (76.1% of the pool) have reported partial-year 2016 net cash flow (NCF) figures, while the remaining loans (excluding one loan (0.5% of the pool)) have reported YE2015 NCF figures. According to the YE2015 NCFs, the transaction had a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 1.46 times (x) and 9.7%, respectively, compared with the DBRS underwritten (UW) figures of 1.37x and 9.1%, 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 1.46x compared with the DBRS UW figure of 1.32x, reflective of a WA amortizing NCF growth of 11.3%. There are four loans (14.3% of the pool) in the Top 15 exhibiting NCF declines compared with the DBRS UW figures, with declines ranging from 5.4% to 22.8%. These four loans include Akers Mill Square (Prospectus ID#5, 6.4% of the pool), GEM Hotel (Prospectus ID#10, 3.1% of the pool), The Dorchester at Forest Park (Prospectus ID#13, 2.7% of the pool) and Hilton Garden Inn Houston (Prospectus ID#14, 2.2% of the pool).

As of the January 2017 remittance, there are two loans (1.1% of the pool) in special servicing and eight loans (13.3% of the pool) on the servicer’s watchlist. The two loans in special servicing -- the Holiday Inn Express Snyder (0.6% of the pool) and the La Quinta Inn & Suites Floresville (0.5% of the pool) loans -- are both secured by limited-service hotels located in heavily energy-dependent markets. Based on the most recent appraisals (May 2016 and August 2016), property values have dropped by approximately 77.0% since issuance. Of the eight loans on the servicer’s watchlist, five (9.7% of the pool) were flagged because of performance-related reasons. As of Q3 2016 financials, these loans had a WA DSCR of 1.08x compared with the WA DBRS UW figure of 1.34x, representing an 18.7% NCF decline.

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 at www.ireports.dbrs.com.

For more information on these rating actions, please contact us at info@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 (January 2017) and CMBS North American Surveillance (December 2016), which can be found on our website under Methodologies.