DBRS Confirms Ratings on COMM 2014-LC15 Mortgage Trust

DBRS Limited (DBRS) 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 A-M at AAA (sf)
-- Class B at AA (sf)
-- Class PEZ at A (sf)
-- Class C at A (sf)
-- Class X-B at BBB (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (low) (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. At issuance, the collateral consisted of 48 fixed-rate loans secured by 197 commercial properties. As of the December 2017 remittance, all loans remained in the pool with an aggregate principal balance of $892.6 million, representing a collateral reduction of 4.1% since issuance as a result of scheduled loan amortization. There are currently three loans (12.5% of the pool) with remaining partial interest-only (IO) periods, ranging from one to 14 months, while two loans (9.1% of the pool) are structured with full IO terms. Two loans (1.4% of the pool) are secured by collateral that has been fully defeased. To date, 41 loans (86.0% of the pool) reported partial-year 2017 financials, while 45 loans (97.7% of the pool) reported YE2016 financials. Based on the most recent year-end financial reporting, the transaction had a weighted-average (WA) debt service coverage ratio (DSCR) and WA Debt Yield of 1.54 times (x) and 10.3%, respectively, compared with the DBRS WA Term DSCR and WA Debt Yield of 1.37x and 9.1%, respectively.

The pool is concentrated by property type, as 14 loans, representing 31.4% of the pool, are secured by retail properties, while seven loans (20.9% of the pool) are secured by office properties and ten loans (19.2% of the pool) are secured by multifamily properties. By loan size, the pool is also concentrated, as the top ten and top 15 loans represent 62.8% and 75.2% of the pool, respectively. Based on the most recent cash flows available, the top 15 loans reported a WA DSCR of 1.41x, compared with the WA DBRS Term DSCR of 1.33x, which is reflective of a 6.8% net cash flow growth over the DBRS issuance figures.

As of the December 2017 remittance, there are two loans (1.1% of the pool) in special servicing and nine loans (9.6% of the pool) on the servicer’s watchlist. The two loans in special servicing, the Holiday Inn Express Snyder (Prospectus ID#33, 0.6% of the pool) and the La Quinta Inn & Suites Floresville (Prospectus ID#41, 0.5% of the pool), are each secured by limited-service hotels located in heavily energy-dependent markets. Based on the most recent appraisals (May 2017 and October 2017), property values have dropped by approximately 75% since issuance. Of the nine loans on the servicer’s watchlist, four loans (4.4% of the pool) were flagged as a result of deferred maintenance, while the remaining five loans (5.2% of the pool) were flagged because of occupancy declines and/or near-term tenant rollover. Based on the most recent financials, the five loans with potential increases in vacancy had a WA DSCR of 1.48x, compared to the WA DBRS Term DSCR of 1.25x.

Classes X-A, X-B and X-C are IO certificates that reference a single rated tranche or multiple rated tranches. The IO ratings mirror 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 and specially serviced loans in the transaction, as well as the top 15 loans where updated performance information from issuance was available, in the DBRS Viewpoint platform. Registration and access to content 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 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.

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 under Related Documents or by contacting us at info@dbrs.com.

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 for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

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