DBRS Confirms All Classes of Citigroup Commercial Mortgage Trust 2014-GC21 with Stable Trends

DBRS Limited (DBRS) confirmed the ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2014-GC21 issued by Citigroup Commercial Mortgage Trust 2014-GC21 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-AB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (sf)
-- Class X-B at A (high) (sf)
-- Class C at A (sf)
-- Class PEZ at A (sf)
-- Class D at BBB (low) (sf)
-- Class X-C at BB (high) (sf)
-- Class E at BB (sf)
-- Class X-D at BB (low) (sf)
-- Class F at B (high) (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance. The collateral consists of 70 fixed-rate loans secured by 111 commercial properties. Six loans, representing 54.0% of the pool balance (including two of the largest loans), are structured with full-term interest-only (IO) payments. An additional 23 loans, representing 32.3% of the pool, were structured with partial-term IO payments at issuance, with only four loans (representing 9.2% of the pool) with partial IO terms remaining. As of the February 2018 remittance, there has been a collateral reduction of 3.6% since issuance as a result of scheduled loan amortization. Loans representing 92.0% of the pool balance reported full year-end 2016 financials, and these loans reported a weighted-average (WA) debt-service coverage ratio (DSCR) and WA debt yield of 1.64 times (x) and 10.7%, respectively, compared with the DBRS Term DSCR and DBRS Debt Yield of 1.39x and 8.5%, respectively. The largest 15 loans reported a WA DSCR and WA debt yield of 1.58x and 9.9%, respectively, representing a WA net cash flow improvement of 17.6% over the DBRS Net Cash Flow figures derived at issuance.

The pool does have challenges in a relatively high concentration of retail properties, which represent 36.4% of the pool balance. Given the current environment for the retail sector in the volume of recent store closures and chain bankruptcies, this is considered particularly noteworthy. Overall, however, performance is stable as the retail loans in the pool reported a WA YE2016 DSCR and WA debt yield of 1.60x and 9.2%, respectively. In addition, most of the retail loans in the pool are secured by anchored retail or regional mall properties, which are generally more desirable compared with unanchored retail property types. In addition, loans comprising 30.9% of the pool, secured by retail properties, are located in established suburban markets.

As of the February 2018 remittance, there were ten loans representing 19.1% of the pool balance on the servicer’s watchlist, including the largest loan in the pool, Maine Mall (Prospectus ID#1 – 12.5% of the pool balance), which is being monitored due to the departure of anchor tenant Bon-Ton. The loan benefits from a strong sponsorship in GGP, Inc. (GGP), and Maine Mall is considered the prominent mall in the state, serving as a true destination centre for a relatively large geographic area. Most of the loans on the servicer’s watchlist are being monitored for upcoming lease expiration dates, with many of the leases in questions since renewed or spaces re-leased and most of the properties located in stable suburban markets.

There is one loan that DBRS is monitoring for the loss of a grocery anchor in Prospectus ID#13, Hairston Village (1.7% of the pool). It is also noteworthy that the loan was reported late but less than 30 days delinquent for February 2018. DBRS has asked the servicer why the loss of Kroger (30.6% of the net rentable area) in October 2017 did not result the loan’s addition to the watchlist. As of the publication date of this press release, the servicer’s response is pending. For additional information on this loan, please see the loan commentary on the DBRS Viewpoint platform, for which information is provided below.

Classes X-A, X-B, X-C and X-D 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.

As part of this review cycle, DBRS has provided updated analysis and in-depth commentary in the DBRS Viewpoint platform for the largest 15 loans in the transaction, as well as the larger and/or pivotal loans on the servicer’s watchlist in the DBRS Viewpoint platform.

For complimentary access to this content, please register at viewpoint.dbrs.com. The platform includes issuer and servicer data for the entire CMBS universe, as well as deal and loan-level commentary for all DBRS rated transactions.

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 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.