DBRS Confirms All Classes of J.P. Morgan Chase Commercial Mortgage Securities Trust, Series 2014-C25

DBRS Limited (DBRS) confirmed the ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2014-C25 issued by J.P. Morgan Chase Commercial Mortgage Securities Trust, Series 2014-C25:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4A1 at AAA (sf)
-- Class A-4A2 at AAA (sf)
-- Class A-5 at AAA (sf)
-- Class A-S at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class B at AA (high) (sf)
-- Class X-C at AA (low) (sf)
-- Class C at A (high) (sf)
-- Class EC at A (high) (sf)
-- Class X-D at BBB (sf)
-- Class D at BBB (low) (sf)
-- Class X-E at BB (high) (sf)
-- Class E at BB (sf)
-- Class X-F at BB (low) (sf)
-- Class F at B (high) (sf)

The Class A-S, Class B and Class C certificates may be exchanged for the Class EC certificates (and
vice versa).

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction, which has remained generally in line with DBRS’s expectations since issuance. The collateral consists of 65 fixed-rate loans secured by 157 properties, and as of the September 2018 remittance there has been a collateral reduction of 2.9% as a result of scheduled loan amortization with all of the original loans remaining in the pool. However, there are four loans, representing 7.1% of the current pool balance, that are fully defeased. Loans representing 90.8% of the current pool balance are reporting YE2017 figures, with a weighted-average (WA) debt service coverage ratio (DSCR) and a WA debt yield of 1.85 times (x) and 10.5%, respectively. The WA DBRS Term DSCR and WA DBRS Debt Yield for the pool at issuance were 1.62x and 9.0%, respectively. The largest 15 loans in the pool collectively represent 59.1% of the transaction balance, and those loans showed a WA net cash flow growth of 17.0% over the DBRS issuance figures at YE2017, with a WA DSCR and in-place debt yield of 2.00x and 10.4%, respectively.

As of the September 2018 remittance, there are seven loans on the servicer’s watchlist and four loans in special servicing, representing 6.1% and 1.6% of the current pool balance, respectively. Most of the loans on the servicer’s watchlist are being monitored for occupancy and/or low DSCR figures, but all seven are generally small loans, with the largest loan in the 3600 San Clemente Building B loan (Prospectus ID #22, 1.8% of the pool), which is secured by a Class A suburban office property in Austin, Texas and is being monitored for occupancy and cash flow declines since issuance. Recent leasing activity suggests occupancy will improve in 2019 for that property, with the overall submarket generally healthy and over $200,000 in leasing reserves available to fund costs for new tenants.

Three of the four loans in special servicing are secured by limited-service hotels. The Fairfield Inn Dayton North loan (Prospectus ID #54, 0.4% of the current pool balance) and the Holiday Inn Express Kirksville loan (Prospectus ID #59, 0.4% of the current pool balance) are both secured by limited-service hotel properties that have lost their respective flags since issuance. The only non-hotel loan in special servicing, East Jackson Shopping Center (Prospectus ID #63, 0.3% of the current pool balance), is in special servicing for imminent default following the collateral property’s loss of the Kroger anchor.

It is noteworthy that the pool has a concentration of retail properties with Sears or Kmart as a tenant, with three loans, representing 14.0% of the current pool balance, including two loans in the top 15. With the recent announcement of the Sears bankruptcy and related store closures on October 15, 2018, one of those loans, Hershey Square Shopping Center (Prospectus ID #17, 1.9% of the current pool balance), is confirmed to be affected as the Kmart at the subject (47.4% of net rentable area (NRA) on a lease through March 2019) was listed for closure. The other exposure is in the Grapevine Mills (Prospectus ID #3, 6.4% of the current pool balance) and Mall at Barnes Crossing and Market Center Tupelo (Prospectus ID #4, 5.7% of the current pool balance) loans, with both housing a Sears location. The Sears Appliance Outlet tenant at Grapevine Mills represents 1.7% of the NRA on a lease through November 2023, while the Sears at Mall at Barnes Crossing and Market Center Tupelo is that property’s third-largest tenant, representing 13.1% of NRA and on a lease through March 2020. According to the trailing 12 months August 2018 tenant sales report for the Mall at Barnes Crossing and Market Center Tupelo, Sears reported sales of $56 per square foot (psf), which is a 21.3% decline from prior-year sales of $71 psf and a further decline from issuance sales of $103 psf. The closure lists announced thus far have not included either of those Sears locations, but DBRS will continue to monitor closely for developments and has provided detailed commentary on both loans in the DBRS Viewpoint platform.

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:

-- Grapevine Mills (Prospectus ID #3, 6.4% of pool)
-- Mall at Barnes Crossing and Market Center Tupelo (Prospectus ID #4, 5.7% of pool)
-- Hershey Square Shopping Center (Prospectus ID #17, 1.9% of pool)
-- Park Place (Prospectus ID #19, 1.9% of pool)
-- Brettwood Village Shopping Center (Prospectus ID #38, 0.9% of pool)
-- Hampton Inn Houston – Northwest (Prospectus ID #49, 0.6% of pool)
-- Fairfield Inn Dayton North (Prospectus ID #54, 0.4% of pool)
-- Holiday Inn Express Kirksville (Prospectus ID #59, 0.4% of pool)
-- East Jackson Shopping Center (Prospectus ID #63, 0.3% of pool)

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 North American CMBS 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.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.