DBRS Confirms Ratings of JPMBB Commercial Mortgage Securities Trust 2014-C21, Stable Trends

DBRS Limited (DBRS) has today confirmed all classes of Commercial Mortgage Pass-Through Certificates, Series 2014-C21 (the Certificates), issued by JPMBB Commercial Mortgage Securities Trust 2014-C21 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-5 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 A-S at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class EC at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (sf)
-- Class F at B (high) (sf)

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

The rating confirmations reflect the overall stable performance exhibited by the transaction since issuance in 2014. The collateral consists of 73 fixed-rate loans secured by 84 commercial properties. As of the February 2017 remittance, the pool had an aggregate balance of approximately $1.25 billion, representing a collateral reduction of 1.4% as a result of scheduled loan amortization.

The pool is primarily concentrated by four property types, as 20 loans, representing 33.0% of the pool, are secured by retail properties (four of which are regional malls, representing 19.6% of the pool); 16 loans (27.7% of the pool) are secured by office properties; 17 loans (17.8% of the pool) are secured by multifamily properties; and six loans (14.2% of the pool) are secured by hotel properties. By geographical location, the pool is relatively diverse, as the largest concentration by state is California with seven loans (19.6% of the pool), followed by Virginia with six loans (14.2% of the pool), Florida with eight loans (9.2% of the pool) and Texas with eight loans (9.2% of the pool). Six loans (11.5% of the pool) are structured with full interest-only (IO) terms, while an additional 18 loans (36.2% of the pool) have partial IO periods remaining, ranging from two month to 28 months.

To date, 18 loans (19.1% of the pool) have reported YE2016 net cash flow (NCF) figures, while 68 loans (95.6% of the pool) have reported partial-year 2016 NCF figures (most being Q3 2016) and 72 loans (99.5% of the pool) have reported YE2015 NCF figures. As calculated on the YE2015 NCF figures, the transaction had a weighted-average (WA) amortizing debt service coverage ratio (DSCR) and WA debt yield of 1.62 times (x) and 10.6%, respectively, compared with the DBRS issuance figures of 1.48x and 9.4%, respectively.

Based on the most recent NCF figures (both partial-year and YE2016), the Top 15 loans (59.6% of the pool) reported a WA amortizing DSCR of 1.77x compared with the DBRS issuance figure of 1.58x, which is reflective of a WA NCF growth of 19.0%. There are two loans (12.5% of the pool) in the Top 15 exhibiting NCF declines as compared with the DBRS issuance figures, with declines ranging from 9.4% to 16.8%. These two loans include Showcase Mall (Prospectus ID#1, 8.3% of the pool) and Westminster Mall (Prospectus ID#5, 4.2% of the pool). Both loans are secured by regional malls, both of which have recently experienced vacancy increases; however, the increase in vacancy at Showcase Mall is relatively minor, while Westminster Mall has recently seen positive leasing momentum. DBRS will monitor these loans for developments through the full year-end reporting.

As of the February 2017 remittance, there are three loans (1.4% of the pool) in special servicing and seven loans (6.2% of the pool) on the servicer’s watchlist. One of the loans in special servicing was transferred after the borrower refused to fund monthly escrows, and another loan was transferred when the borrower advised that debt service shortfalls could no longer be funded out of pocket. The third loan is expected to be returned to the master servicer in the near term. Of the seven loans currently on the servicer’s watchlist, one loan (0.8% of the pool) was flagged because of deferred maintenance, while the remaining six loans (5.4% of the pool) were flagged because of recent declines in occupancy and/or near-term tenant rollover. Based on the most recent cash flow reporting (partial-year 2016 financials), these six loans reported a WA amortizing DSCR of 1.03x, compared with the DBRS issuance figure of 2.09x, which is reflective of a WA amortizing NCF decline of 18.3%.

At issuance, DBRS shadow-rated both the Miami International Mall (Prospectus ID#3, 4.8% of the pool) and 307 West 38th Street (Prospectus ID#12 2.8% of the current pool balance) loans as investment grade. DBRS confirms that the performance of both loans remains consistent with investment-grade loan characteristics.

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 commercial mortgage-backed securities (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 principal methodologies are the North American CMBS Rating Methodology (January 2017) and CMBS North American Surveillance (December 2016), which can be found on 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.