DBRS Confirms Ratings of WFRBS Commercial Mortgage Securities Trust 2014-LC14

DBRS Limited (DBRS) confirmed the ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2014-LC14 issued by WFRBS Commercial Mortgage Trust 2014-LC14:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-3FL at AAA (sf)
-- Class A-3FX at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-5 at AAA (sf)
-- Class A-S at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class PEX at A (low) (sf)
-- Class X-B at BBB (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (sf)
-- Class X-C at B (high) (sf)
-- Class F at B (sf)

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

The rating confirmations reflect the overall stable performance of the transaction, which has experienced a collateral reduction of 5.2% as of the October 2017 remittance. At issuance, the transaction consisted of 71 loans secured by 144 commercial and multifamily properties. As of the October 2017 remittance, 70 loans remain in the pool with an aggregate outstanding balance of $1.2 billion. Based on the YE2016 financials, the pool reported a weighted-average (WA) debt service coverage ratio (DSCR) of 1.80 times (x) and a WA debt yield of 11.6%. Comparatively, the YE2015 WA DSCR and WA debt yield were 1.74x and 11.1%, respectively. The pool is concentrated with loans secured by retail properties, which represent 18.5% of the current pool balance. Three of the retail loans, representing 11.5% of the current pool balance, are in the Top 15 and are reporting a WA YE2016 DSCR of 2.54x.

As of the October 2017 remittance, there are two loans in special servicing, representing 1.6% of the current pool balance, and ten loans on the servicer’s watchlist, representing 15.2% of the current pool balance. The largest loan in special servicing is Prospectus ID #33, Westridge Apartments (0.90% of the pool). That loan transferred to special servicing in June 2016 and is secured by a multifamily property in Williston, North Dakota, an area significantly affected by the negative trends in the oil and gas industries over the past several years. Based on the most recent appraisal, DBRS estimates the loss severity for this loan could approach or even exceed 80% at resolution. For more information on the specially serviced and watchlisted loans, please see the related DBRS commentary on the DBRS Viewpoint platform.

At issuance, DBRS shadow rated two loans investment grade: Prospectus ID #3, The Outlet Collection – Jersey Gardens, and Prospectus ID #4, Westin New York at Times Square – Lease Fee. DBRS has been informed by the servicer that as of November 2017, a defeasance was in process for the Westin New York at Times Square – Lease Fee loan. DBRS confirms with this review that the performance of both loans, which collectively represent 11.3% of the current pool balance, remains consistent with investment-grade loan characteristics. DBRS will continue to monitor for developments surrounding the defeasance.

Classes X-A, X-B, X-C are interest-only (IO) certificates that reference a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated reference tranche adjusted upward by one notch if senior in the waterfall.

All ratings will be subject to ongoing surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed or discontinued by DBRS.

DBRS has provided updated loan-level commentary and analysis for larger and/or pivotal watchlisted loans and specially serviced loans in the transaction, as well as the Top 15 loans, in the DBRS Viewpoint platform. Registration is free. To view these and future loan-level updates provided as part of DBRS’s ongoing surveillance for this transaction, please register or log into DBRS Viewpoint at viewpoint.dbrs.com.

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.

The principal methodology is CMBS North American Surveillance, which can be found on dbrs.com under Methodologies. For a list of the Structured Finance related methodologies that may be used during the rating process, please see the DBRS Global Structured Finance Related Methodologies document on www.dbrs.com. Please note that not every related methodology listed under a principal Structured Finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The rated entity or its related entities did participate initially in the rating process. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities.