DBRS Confirms Ratings for All Classes and Assigns Negative Trends on Two Classes of COMM 2014-CCRE18 Mortgage Trust

DBRS Limited (DBRS) confirmed all classes of the Commercial Mortgage Pass-Through Certificates, Series 2014-CCRE18 (the Certificates) issued by COMM 2014-CCRE18 Mortgage Trust 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-M at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class PEZ 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)

Additionally, DBRS assigned Negative trends for Classes F and X-C to reflect DBRS’s concerns with the loans in special servicing and with the larger loans on the servicer’s watchlist. The trends on the remaining classes are Stable.

At issuance, the collateral consisted of 49 fixed-rate loans secured by 60 commercial properties. As at the April 2018 remittance, all loans remain in the pool with an outstanding balance of $960.1 million, representing a collateral reduction of 3.6% since issuance. There are two loans that are fully defeased as at the April 2018 remittance, representing 7.7% of the pool balance. The weighted-average (WA) DBRS Term debt service coverage ratio (DSCR) and WA DBRS Debt Yield at issuance were 1.45 times (x) and 9.1%, respectively. As of the most recent reporting, the pool reported a WA DSCR and in-place debt yield of 1.60x and 10.3%, respectively. Forty-eight loans (61.9% of the pool) are reporting YE2017 financials while 11 loans (25.3% of the pool) reported Q3 2017 financials. Based on the most recent financials, the top 15 loans (69.3% of the pool) had a WA DSCR of 1.64x, compared with the YE2016 WA DSCR of 1.55x and the DBRS issuance figure of 1.50x, reflective of a 7.3% NCF increase year over year.

As at April 2018, there ten 10 loans (18.7% of the pool) on the servicer’s watchlist. These loans are being monitored for a variety of reasons, with noteworthy loans including the Pacific Design Center loan (Prospectus ID #2, 9.9% of the pool), which is being monitored for a low occupancy and DSCR, and the 399 Thornall Street loan (Prospectus ID #8, 3.6% of the pool), which is being monitored for major tenant rollover. To capture concerns with the watchlisted loans, DBRS assumed a stressed cash flow scenario to increase the probability of default where merited.

There are three loans (6.2% of the pool) currently in special servicing. The largest of these loans is Midwest Portfolio (Prospectus ID #9, 3.0% of the pool), which was transferred in May 2017 when the borrower failed to cooperate with the servicer’s efforts to establish a lockbox and cash management as required by the loan documents. The special servicer is reportedly pursuing foreclosure, and it is noteworthy that the most recent appraisals show an overall improvement in value of 8.0% since issuance. The second-largest loan in special servicing, 22 Exchange Apartments (Prospectus ID #17, 2.0% of the pool), was transferred to special servicing in January 2018 due to imminent default and the special servicer is currently evaluating the workout strategy with a receiver appointed. The third loan in special servicing, GreatStay Hotel Portfolio (Prospectus ID #23, 1.2% of the pool), was transferred to special servicing in March 2017 due to payment default. Portfolio cash flows fell after a downturn in the energy markets where the properties are located. The special servicer is pursuing foreclosure and the most recent valuation suggests a loss at liquidation is likely. For additional information on these loans and the analysis approach for this review, please see the Loan Commentary in the DBRS Viewpoint platform, for which information is provided below.

Classes X-A, X-B and 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.

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:
-- Bronx Terminal Market (Prospectus ID#1,14.1% of the pool balance)
-- Pacific Design Center (Prospectus ID#2, 9.9% of the pool balance)
-- Southfield Town Center (Prospectus ID#4, 6.4% of the pool balance)
-- 399 Thornall Street (Prospectus ID#8, 3.6% of the pool balance)
-- Midwest Portfolio (Prospectus ID9#, 3.0% of the pool balance)
-- Deerfield Park Plaza (Prospectus ID#12, 2.3% of the pool balance)
-- 22 Exchange Apartments (Prospectus ID#17, 2.0% of the pool balance)
-- GreatStay Hotel Portfolio (Prospectus ID#23, 1.2% of the pool balance)
-- Bristol Village (Prospectus ID#33, 0.8% of the pool balance)
-- Fairfield Inn Butler (Prospectus ID#32, 0.7% of the pool balance)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.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.