DBRS Confirms Ratings of Citigroup Commercial Mortgage Trust 2014-GC19, Stable Trends

DBRS Limited (DBRS) has today confirmed the ratings of the Commercial Mortgage Pass-Through Certificates, Series 2014-GC19 issued by Citigroup Commercial Mortgage Trust 2014-GC19 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-AB 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 A-S at AAA (sf)
-- Class B at AA (high) (sf)
-- Class PEZ at AA (low) (sf)
-- Class C at AA (low) (sf)
-- Class D at BBB (sf)
-- Class E at BB (high) (sf)
-- Class F at BB (low) (sf)

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

The rating confirmations reflect the overall stable performance exhibited by the transaction since issuance in 2014. The collateral consists of 76 fixed-rate loans secured by 125 commercial properties. As of the February 2017 remittance, the pool had an aggregate balance of approximately $978.0 million, representing a collateral reduction of 3.7%, following the full repayment of two loans, LV III Portfolio (Prospectus ID#34) and Gateway Apartments (Prospectus ID#67), in addition to scheduled loan amortization. Three loans (1.9% of the pool) are secured by collateral that has been fully defeased.

The pool is primarily concentrated by three property types, as 12 loans (31.7% of the pool) are secured by office properties, 30 loans (21.5% of the pool) are secured by retail properties and 22 loans (21% of the pool) are secured by multifamily properties. By geographical location, the pool is relatively diverse, as the largest concentration by state is in Arizona, which harbors five loans (13.0% of the pool), followed by New York with five loans (11.2% of the pool), Texas with 13 loans (11.0% of the pool) and California with nine loans (8.5% of the pool). Four loans (12.7% of the pool) are structured with full interest-only (IO) terms, while an additional five loans (9.5% of the pool) have partial IO periods remaining, ranging from two months to 25 months.

Excluding defeasance, 52 loans (77.5% of the pool) reported partial-year 2016 (most being Q3 2016) net cash flow (NCF) figures, while 70 loans (94.9% of the pool) reported YE2015 NCF figures. According to the YE2015 NCF figures, the transaction had a weighted-average (WA) amortizing debt service coverage ratio (DSCR) and WA debt yield of 1.64 times (x) and 10.5%, respectively, compared with the DBRS issuance figures of 1.43x and 8.9%, respectively.

Based on the partial year 2016 cash flows, the Top 15 loans (57.0% of the pool) reported a WA amortizing DSCR of 1.68x, compared with the DBRS issuance figure of 1.47x, reflective of a WA NCF growth of 16.6%. There are three loans (11.6% of the pool) in the Top 15 exhibiting NCF declines compared with the DBRS UW figures, with declines ranging from -8.4% to -17.5%. These three loans include 1500 Spring Garden (Prospectus ID#3, 7.1% of the pool), 350 North Clark (Prospectus ID#10, 2.6% of the pool) and Mid-City Plaza (Prospectus ID#13, 1.9% of the pool). In general, these trends are not indicative of sustainable performance declines for those loans and DBRS will monitor all three for developments through the full year-end reporting.

As of the February 2017 remittance, there are no loans in special servicing and 12 loans (11.5% of the pool) on the servicer’s watchlist. Six of the watchlisted loans (8.0% of the pool) were flagged for deferred maintenance, while the other six loans (3.5% of the pool) were flagged as a result of either increased vacancy and/or near-term tenant rollover. Based on the most recent cash flow reporting (ranging from YE2015 through partial-year 2016 financials), these 12 loans reported a WA DSCR of 1.56x, compared to the DBRS UW figure of 1.42x, reflective of a WA amortizing NCF growth of 7.9%.

The ratings assigned to Classes D, E and F materially deviate from the higher ratings implied by the Large Pool Multi-borrower Parameters. DBRS considers this to be a methodology deviation when there is a rating differential of three or more notches between the assigned rating and the rating implied by the Large Pool Multi-borrower Parameters; in this case, the sustainability of loan performance trends were not demonstrated and, as such, was reflected in the ratings.

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 in to 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 the North American CMBS Rating Methodology (January 2017) and CMBS North American Surveillance (December 2016), which can be found on www.dbrs.com under Methodologies.

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