DBRS Morningstar Confirms Ratings on All Classes of WFRBS Commercial Mortgage Trust 2014-C25

DBRS, Inc. (DBRS Morningstar) confirmed its ratings on all classes of the Commercial Mortgage Pass-Through Certificates, Series 2014-C25 issued by WFRBS Commercial Mortgage Trust 2014-C25 as follows:

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

All trends are Stable.

The rating confirmations reflect the stable performance of the transaction, which has remained in line with DBRS Morningstar’s expectations at issuance. At issuance, the transaction consisted of 59 loans with an original trust balance of $875.7 million. As of the January 2021 remittance report, 55 loans remain in the transaction with a current trust balance of $786.5 million, representing a collateral reduction of approximately 10.2% since issuance resulting from amortization, the payoff of three loans, and the liquidation of a single loan in 2019.

Thirteen loans, representing 23.2% of the current trust balance, are on the servicer’s watchlist. These loans are generally being monitored for low debt service coverage ratios (DSCR) that have generally been driven by disruptions related to the pandemic. The largest loan on servicer’s watchlist is Four Seasons Hotel – Seattle (Prospectus ID#4, 5.0% of the pool balance), which is secured by a 147-room full-service hotel in downtown Seattle. The property also includes 36 residential condominium units and related parking, which are not part of the collateral. The loan is on watchlist after the borrower requested Coronavirus Disease (COVID-19)-related relief. The sponsor and the servicer have agreed to a forbearance, which allowed the borrower to use funds reserved for furniture, fixtures, and equipment for debt service through December 2020. The property had shown strong performance pre-coronavirus as the year-end net cash flow (NCF) was 57% higher than issuance while covering with a DSCR of 2.97x.

DBRS Morningstar is also concerned with the performance of the Tobin Lofts (Prospectus ID #7; 3.9% of the pool) loan. The loan is secured by a student-housing property totaling 225 units (552 beds) in San Antonio. The property also includes 13,359 square feet of ground floor retail. The property, which was built in two phases between 2013 and 2014, accommodates 13 nearby colleges. The property is directly adjacent to San Antonio College, while Trinity College, University of the Incarnate Word, and University of Texas San Antonio (downtown campus) are all within two miles. The loan has been underperforming since issuance as NCF has trended downward year over year. The year-end 2019 NCF was down 39% since issuance while posting a DSCR of 0.83x. Despite these concerns, the loan remains current and the sponsor has not requested coronavirus relief.

The La Quinta Plainfield (Prospectus ID#37; 0.6% of pool) is the only loan in special servicing. The loan is secured by a 96-room limited-service hotel in Plainfield, Indiana (15 miles southwest of Indianapolis). The loan transferred to special servicing in July 2020 for payment default. The loan had maintained stable performance pre-coronavirus as the year-end 2019 NCF was up 17% since issuance while posting a healthy DSCR of 2.00x. According to the most recent servicing commentary, the special servicer and borrower continue to negotiate forbearance terms. An updated appraisal completed in July valued the property at $5.8 million, which reflects a 31% decrease from the at issuance appraisal of $8.5 million.

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, 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 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 loan in the transaction:

-- Prospectus ID#37 – La Quinta Plainfield (0.6% 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 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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