DBRS Confirms Ratings of WFRBS Commercial Mortgage Trust 2014-C21

DBRS Limited (DBRS) confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2014-C21 issued by WFRBS Commercial Mortgage Trust 2014-C21 as follows:

-- 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-S at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class A-SBFL at AAA (sf)
-- Class A-SBFX at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class PEX at A (low) (sf)
-- Class X-B at BBB (sf)
-- Class D at BBB (low) (sf)
-- Class X-C at BB (high) (sf)
-- Class E at BB (sf)
-- Class X-D at B (high) (sf)
-- Class F at B (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance. The collateral consists of 120 fixed-rate loans secured by 140 commercial properties. As of the July 2018 remittance, there has been a total collateral reduction of 5.3% as a result of scheduled loan amortization and one loan paid in full. The remaining loans in the pool have a current trust balance of $1,351 million. Based on the most recent year-end (YE) reporting available, the portfolio exhibited a weighted average (WA) debt service coverage ratio (DSCR) and in-place debt yield of 1.71x and 10.2%, respectively, compared with 1.81x and 10.2%, respectively, at issuance. The top 15 loans reported a WA DSCR and debt yield of 1.75x and 9.8%, respectively, reflective of a WA cash flow improvement of 6.8% since issuance, based on the YE2017 cash flow figures. It is noteworthy that there are two regional malls located in secondary markets within the top 15 loans, collectively representing 4.9% of the pool in Montgomery Mall (Prospectus ID #9, 3.2% of the pool) and Oak Court Mall (Prospectus ID #15, 1.7% of the pool). Cash flows are generally healthy for both loans, but there are some concerns with the Oak Court Mall occupancy trends. For further detail, please see the loan commentary for both on the DBRS Viewpoint site, for which information has been provided below.

Six loans, comprising 7.9% of the pool, are scheduled to mature in June and July of 2019, including the Sheraton Austin loan (Prospectus #3, 4.7% of the pool). In general, the refinance profile for these loans is healthy, with a WA DSCR and debt yield of 2.52x and 11.4%, respectively. One exception is the Fitch Apartments loan (Prospectus #52, 0.5% of the pool), which is currently in special servicing and further discussed below.

As of the July 2018 remittance, there are 29 loans, representing 25.6% of the pool balance, on the servicer’s watchlist. Additionally, two loans, representing 1.8% of the pool balance, are currently in special servicing. The watchlisted loans are being monitored for a variety of reasons, and while the high watchlist concentration is notable, in general, DBRS believes the outlook is healthy for the largest loans being monitored, including four of the top 15 loans in the pool, which cumulatively represent 16.6% of the pool. In the event the risk for these loans is significantly increased from issuance, DBRS applied a stressed cash flow scenario in the analysis to reflect those developments.

The larger of the two specially serviced loans, Best Western Premier Hotel (Prospectus ID#19, 1.3% of the pool), is pending a return from to the master servicer. The smaller loan, Fitch Apartments, is being marketed for sale by the receiver and the special servicer expects the loan to be resolved by YE2018. DBRS assumed a loss severity in excess of 35.0% for this loan based on the most recent appraised value and the time expected to resolve.

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 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:

-- Fairview Park Drive (Prospectus ID#1)
-- Montgomery Mall (Prospectus ID#9)
-- Oak Court Mall (Prospectus ID#15)
-- Best Western Premier Hotel Napa (Prospectus ID#19)
-- Fitch Apartments (Prospectus ID#52)

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.

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.