DBRS Downgrades Two Classes of COMM 2014-LC17 Mortgage Trust

DBRS Limited (DBRS) downgraded two classes of Commercial Mortgage Pass-Through Certificates, Series 2014-LC17 (the Certificates) issued by COMM 2014-LC17 Mortgage Trust as follows:

-- Class F downgraded to B (low) (sf) from B (high) (sf)
-- Class X-E downgraded to B (sf) from BB (low) (sf)

DBRS also confirmed the following classes:

-- 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 (sf)
-- Class X-B at AA (low) (sf)
-- Class C at A (high) (sf)
-- Class PEZ at A (high) (sf)
-- Class X-C at BBB (sf)
-- Class D at BBB (low) (sf)
-- Class X-D at BB (sf)
-- Class E at BB (low) (sf)
-- Class X-F at B (low) (sf)
-- Class G at CCC (sf)

In addition, Negative trends were assigned to Classes E and X-D and maintained on Classes F, X-E and X-F to reflect DBRS’s ongoing concerns with the loans in special servicing. All other trends are Stable, with the exception of Class G, which has been assigned a rating that does not carry a trend and has an Interest in Arrears designation, which was initially assigned in February 2018.

The Class PEZ certificates are exchangeable with the Class A-M, Class B and Class C certificates (and vice versa).

The rating downgrades and Negative trend assignments reflect DBRS’s expectation of losses to the trust for five loans in special servicing: World Houston Plaza (Prospectus ID #20, 1.5% of the pool), Eagle Ford (Prospectus ID #17, 1.3% of the pool), Georgia Multifamily Portfolio (Prospectus ID #35, 0.9% of the pool), Cincinnati Portfolio Pool B (Prospectus ID #59, 0.4% of the pool) and the RSRT Properties (Prospectus ID#62, 0.3% of the pool). Collectively, these loans represent 4.3% of the outstanding pool balance. Three of the loans have been in special servicing for at least two years and two of the loans, World Houston Plaza and RSRT Properties, were transferred to special servicing in December 2017. With this review, DBRS assumed a liquidation scenario resulting in losses to the trust for all five loans in special servicing, with a weighted-average (WA) loss severity of approximately 80.0%. For detail on the analyzed loss by loan and updated commentary on the status of the workout and DBRS viewpoint, please see the loan commentary for these loans in the DBRS Viewpoint platform, for which information has been provided below.

As of the June 2018 remittance, there has been a collateral reduction of 3.6% as a result of scheduled loan amortization, with all of the original loans remaining in the pool and a current trust balance of $1.22 billion. There is one loan, representing 1.7% of the current pool, that is defeased. As of the year-end (YE) 2017 financials (88.7% of the pool reporting), the transaction had a WA debt service coverage ratio (DSCR) and WA in-place debt yield of 1.74x) and 10.5%, respectively, compared to the WA DBRS Term DSCR of 1.57x and WA DBRS Debt Yield of 9.0%, respectively for those same loans. As of the most recent YE financials, the top 15 loans reported a WA DSCR and WA in-place debt yield of 1.72x and 10.1%, respectively.

There are currently 13 loans, representing 14.5% of the pool balance (including three loans in the top 15), on the servicer’s watchlist. The majority of the loans on the watchlist are being monitored for occupancy and/or tenant-related items including upcoming rollover and occupancy fluctuations in the most recent reporting, with a WA YE2017 DSCR of 1.36x for the 14 loans reporting cash flows for that period.

Classes X-A, X-B, X-C, X-D, X-E and X-F are interest-only (IO) certificates that reference a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated applicable reference obligation 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 – Loews Miami Beach Hotel
-- Prospectus ID#2 – Wilton Commercial Portfolio
-- Prospectus ID#3 – 80 and 90 Maiden Lane
-- Prospectus ID#4 – Myrtle Beach Marriot Resort and Spa
-- Prospectus ID#10 – SRC Multifamily Portfolio 2
-- Prospectus ID#11 – SRC Multifamily Portfolio 3
-- Prospectus ID#15 – Quito Village Center
-- Prospectus ID#16 – Town Centre
-- Prospectus ID#26 – Paradise Valley
-- Prospectus ID#28 – Trinagle Plaza
-- Prospectus ID #20 – World Houston Plaza
-- Prospectus ID #17 – Eagle Ford
-- Prospectus ID #35 – Georgia Multifamily Portfolio
-- Prospectus ID #59 – Cincinnati Portfolio Pool B
-- Prospectus ID #62 – RSRT Properties

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.

The ratings assigned to Class E materially deviate from the higher ratings implied by the quantitative results. DBRS considers a material deviation to be a rating differential of three or more notches between the assigned rating and the rating implied by the quantitative results that is a substantial component of a rating methodology. The deviations are warranted given uncertain loan level event risk.

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.