DBRS Confirms Ratings of WFRBS Commercial Mortgage Trust 2014-C20

DBRS Limited (DBRS) confirmed all classes of Commercial Mortgage Pass-Through Certificates, Series 2014-C20 (the Certificates), issued by Wells Fargo Commercial Mortgage Trust 2014-C20 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 A-S at AAA (sf)
-- Class A-SFL at AAA (sf)
-- Class A-SFX at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class X-B at BBB (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (low) (sf)
-- Class X-C at B (sf)
-- Class F at B (low) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction. At issuance, the collateral consisted of 98 fixed-rate loans secured by 142 commercial properties. As of the January 2018 remittance, all loans remained in the pool with an aggregate principal balance of $1.19 billion, representing a collateral reduction of 4.9% since issuance as a result of scheduled loan amortization. There are currently six loans (15.5% of the pool) with remaining partial interest-only (IO) periods, ranging from three to 15 months, while two loans (2.8% of the pool) are structured with full IO terms. Two loans (1.0% of the pool) have been fully defeased. To date, 91 loans (83.4% of the pool) reported partial-year 2017 financials, while 96 loans (99.0% 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 1.67 times (x) and 11.2%, respectively, compared with the DBRS WA Term DSCR and WA Debt Yield of 1.48x and 9.4%, respectively.

The pool is concentrated by property type, as 24 loans, representing 34.4% of the pool, are secured by retail properties (including two regional malls representing 14.5% of the pool), while 11 loans (23.3% of the pool) are secured by office properties and 19 loans (18.4% of the pool) are secured by hotel properties. By loan size, the pool is generally diverse, as the top 15 loans represent a relatively low 56.6% of the pool. Based on the most recent cash flows available, the top 15 loans reported a WA DSCR of 1.59x, compared with the WA DBRS Term DSCR of 1.48x, reflective of a 12.5% net cash flow growth over the DBRS issuance figures.

As of the January 2018 remittance, there is one loan (1.4% of the pool) in special servicing and eight loans (7.0% of the pool) on the servicer’s watchlist. The Minneapolis Apartment Portfolio loan (Prospectus ID#10), was transferred to special servicing in January 2018 following an ongoing inquiry from the city into the sponsor’s rental license. According to the servicer, a settlement has been finalized, and the borrower has until July 2018 to sell the assets and repay the loan in full. Overall, the loans on the servicer’s watchlist are performing, with a WA DSCR of 1.55x (based on the most recent figures available for each loan), with a range of 0.67x and 2.91x. The loans are being monitored for various reasons, most of which do not pose significant near-term risk.

At issuance, DBRS shadow-rated the Rockwell – ARINC HQ loan (Prospectus ID#5, 3.9% of the pool) investment grade and with this review, DBRS confirms the loan’s performance remains in line with the investment grade rating.

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.

As part of this review, DBRS has provided updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Prospectus ID#1 – Woodbridge Center
-- Prospectus ID#5 – Rockwell – ARINC HQ
-- Prospectus ID#6 – Brunswick Square
-- Prospectus ID#9 – Savoy Retail & 60th Street Residential
-- Prospectus ID#10 – Minneapolis Apartment Portfolio
-- Prospectus ID#59 – River Bay Plaza

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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.