DBRS Morningstar Confirms All Classes of COMM 2014-CCRE18 Mortgage Trust

DBRS, Inc. (DBRS Morningstar) confirmed all classes of Commercial Mortgage Pass-Through Certificates, Series 2014-C18 issued by COMM 2014-CCRE18 Mortgage Trust as follows:

-- Class A-4 at AAA (sf)
-- Class A-5 at AAA (sf)
-- Class A-M at AAA (sf)
-- Class A-SB 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 B (high) (sf)
-- Class F at CCC (sf)

DBRS Morningstar also discontinued and withdrew the rating on Class X-C as the bond references a certificate that has reported a realized loss in the unrated Class G certificates. In addition, DBRS Morningstar removed Class F from Under Review with Negative Implications, where it was placed on August 6, 2020, and added the it Interest in Arrears designation. Finally, DBRS Morningstar changed the trend on Class E to Stable from Negative. All other trends are Stable as well with the exception of Class F, which has a rating that does not carry a trend.

In March 2020, DBRS Morningstar downgraded the ratings for three classes because of ongoing concerns with loans in special servicing and on the servicer’s watchlist. The largest loan of concern was the 22 Exchange loan, secured by a student housing property in Akron, Ohio. The loan was resolved with a loss in August 2020, with the $9.7 million loss amount applied to the Class G certificates with the September 2020 remittance. The loss was in line with DBRS Morningstar’s expectations. For further information on those rating actions, please see the press release dated March 23, 2020, on the DBRS Morningstar website.

The rating confirmations for this review reflect the overall stable performance for the transaction since the March 2020 rating actions. As of the February 2021 remittance, the trust collateral consists of 39 of the original 49 loans, totaling $739.6 million. Since issuance, there has been collateral reduction of 25.8%.

The transaction has exposure to retail and hotel properties, representing 29.8% and 7.3% of the current pool balance, respectively, which have been disproportionately affected by the ongoing Coronavirus Disease (COVID-19) pandemic. This risk is partially mitigated because the largest loan in the transaction, Bronx Terminal Market (Prospectus ID#1; 18.2% of the pool), has minimal credit risk as it is secured by an anchored retail center in the Bronx, New York, a dense urban location, with collateral tenants on long-term leases including Target, BJ’s Wholesale Club, Home Depot, and Food Bazaar. The transaction also benefits from defeasance collateral, as five loans, representing 9.8% of the current pool balance, are defeased.

As of the February 2021 reporting, there are nine loans, representing 13.1% of the pool, in special servicing and five loans, representing 15.5% of the pool, on the servicer’s watchlist. All but two of the loans in special servicing are new transfers since the February 2020 surveillance review, with all of the new transfers related to the coronavirus pandemic. Five of the loans in special servicing (9.3% of the pool) remain current, including the largest loan in special servicing, City Place Midtown Apartments (Prospectus ID#5; 5.8% of the pool). This loan, secured by a multifamily property in downtown Houston, transferred to special servicing after the borrower requested coronavirus-related relief; however, the borrower ultimately withdrew the request, and the loan is expected to be returned to the master servicer.

In general, as the larger loans in special servicing are showing current and are generally exhibiting pandemic-related stress, a liquidation scenario was not assumed as part of this review. For those loans that are expected to take a loss, including the two smaller loans that have been in special servicing since 2018, the losses are expected to be contained to the unrated Class G certificates.

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

Classes X-A and X-B 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 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#4 – Southfield Town Center (7.9% of the pool)
-- Prospectus ID#5 – City Place Midtown Apartments (5.8% of the pool)
-- Prospectus ID#8 – 399 Thornall Street (4.6% of the pool)
-- Prospectus ID#15 – Meridian Corporate Center I & II (2.8% of the pool)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com. The platform includes issuer and servicer 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 US 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.

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

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