DBRS Morningstar Confirms All Ratings of COMM 2014-CCRE14 Mortgage Trust

DBRS, Inc. (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass-Through Certificates, Series 2014-CCRE14 issued by COMM 2014-CCRE14 Mortgage Trust as follows:

-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 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 D at BB (high) (sf)
-- Class E at B (low) (sf)
-- Class F at CCC (sf)

All trends are Stable with the exception of Class F, which does not carry a trend.

The rating confirmations and Stable trends reflect the overall stable performance of the transaction. As of November 2020, the transaction consisted of 45 loans totaling $1.03 billion, down from 60 loans at issuance, resulting in collateral reduction of 25.2% including loan amortization. The transaction benefits from a concentration of office collateral, as 11 loans, representing 45.9% of the pool, are secured by office properties, which have shown greater resiliency to cash flow declines during the pandemic. This office concentration includes the pool’s three-largest loans comprising a telecommunications data center in lower Manhattan (60 Hudson Street; Prospectus ID#2, 15.0% of the pool), Google and Amazon Office Portfolio (Prospectus ID#1, 14.5% of the pool balance), and the fee interest in the land underneath 625 Madison Avenue (Prospectus ID#3, 10.7% of the pool balance). Additionally, eight loans, representing 10.6% of the pool, are defeased.

There are three loans, representing 3.9% of the pool, in special servicing, including the tenth-largest loan in the pool, McKinley Mall (Prospectus ID#13, 2.4% of the pool balance). The $24.2 million trust loan represents a pari passu interest in a $38 million whole loan secured by a 728,133-sf regional mall in Buffalo, New York. The loan collateral includes all inline space and three of the property’s four anchor spaces (excluding the former Macy’s space). The loan transferred to the special servicer in 2018 for payment default . The mall’s performance has been trending downward in recent years as the most recent year-end net cash flow was 58% below issuance. The decline in performance can be attributed to the loss of three of the mall’s four anchor tenants including Neiman Marcus, Macy’s, and Sears as well as the subsequent departure of several in-line tenants. The most recent financials reported were as of June 2020 and show occupancy at 54%. According to the servicer, the borrower is cooperating in turning over the title to the lender via a deed-in-lieu. In its analysis, DBRS Morningstar assumed a haircut to the October 2020 appraisal and liquidated the loan from the trust, resulting in a loss severity in excess of 85.0%.

The largest loan on the servicer’s watchlist is the 175 West Jackson (Prospectus ID#8, 3.7% of the pool balance). The loan is secured by a 22-story, 1.5 million sf office tower in the Chicago CBD. The loan has severely underperformed since issuance and transferred to the special servicer in 2018 because of a below break-even DSCR. The loan transferred back to the master servicer in September 2018 after Brookfield Asset Management acquired the property for $305 million ($218/sf) in 2018. Since Brookfield’s acquisition, occupancy has marginally improved from 61% as of year-end 2018 to 67% as of June 2020. DBRS Morningstar analyzed the loan with an elevated probability of default given the borrower has requested Coronavirus Disease (COVID-19) relief.

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

Class X-A is an interest-only (IO) certificate that references 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 are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by DBRS Morningstar.

DBRS Morningstar provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Prospectus ID#8 – 175 West Jackson (3.7% of the pool)
-- Prospectus ID#13 – McKinley Mall (2.4% of the pool)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com The platform includes loan-level data for most outstanding CMBS transactions (including non-DBRS Morningstar-rated), as well as loan-level and transaction-level commentary for most DBRS Morningstar-rated and -monitored transactions.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is North American CMBS Surveillance Methodology (March 6, 2020), which can be found on dbrsmorningstar.com under Methodologies & Criteria. For a list of the structured-finance-related methodologies that may be used during the rating process, please see the DBRS Morningstar Global Structured Finance Related Methodologies document, which can be found on dbrsmorningstar.com in the Commentary tab under Regulatory Affairs. 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.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar 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. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The DBRS Morningstar long-term rating scale definition indicates that ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar’s outlooks and ratings are monitored.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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