DBRS Morningstar Confirms All Ratings on Citigroup Commercial Mortgage Trust 2014-GC25

DBRS Limited (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass-Through
Certificates, Series 2014-GC25 issued by Citigroup Commercial Mortgage Trust 2014-GC25 as follows:

-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-AB at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AA (high) (sf)
-- Class B at AA (sf)
-- Class C at A (low) (sf)
-- Class PEZ at A (low) (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 B (high) (sf)
-- Class F at B (sf)

DBRS Morningstar also removed the ratings on Classes X-E, E, X-F, and F from Under Review with Negative Implications, where they were placed on August 6, 2020. All trends are Stable.

The rating confirmations reflect the overall stable performance of the underlying loans in the transaction since issuance. At issuance, the collateral consisted of 62 fixed-rate loans, secured by 99 commercial properties, with an original trust balance of $842.0 million. As of the February 2021 remittance report, 60 loans remain in the pool with an aggregate principal balance of $784.8 million, representing a collateral reduction of 6.8% since issuance due to the repayment of two loans and scheduled amortization of the other loans. The pool benefits from some notable defeasance, as 10 loans representing 16.4% of the current pool balance (including three of the 15 largest loans, 11.2% of the current pool) have been fully defeased as of the February 2021 remittance report.

The collateral pool is concentrated by property type, with eight loans, representing 36.9% of the current pool balance secured by office properties. Loans secured by retail properties represent the second-largest property type concentration, with 25 loans representing 25.1% of the current pool balance. Three loans secured by lodging properties represent only 2.3% of the current pool balance. The pool is also concentrated by loan size, as the top 15 loans represent 67.8% of the current pool balance.

As of the February 2021 remittance report, 13 loans are on the servicer’s watchlist, representing 18.3% of the current pool balance, including two loans in the top 15, representing 9.7% of the current pool balance. These loans are being monitored for a variety of reasons including low debt service coverage ratios, occupancy declines, instances of deferred maintenance, outstanding advances, and/or requests from the respective borrowers for relief as a result of financial hardship caused by the Coronavirus Disease (COVID-19) pandemic.

There is one loan, Prospectus ID#14 – Denver Merchandise Mart (representing 2.9% of the current pool balance), in special servicing as of the February 2021 reporting. This loan is secured by a wholesale trade mart and exhibition hall in Denver, Colorado, consisting of five interconnected facilities totaling approximately 810,000 square feet (sf). The loan transferred to special servicing in June 2020 for payment default after the property had been closed to the public for most of April and May of 2020 due to the coronavirus pandemic.

According to a report in the Denver Post dated February 11, 2021, the property will cease operation as of March 31, 2021, as it has been sold through a receivership-controlled sale of the property. The special servicer has confirmed the property sale, but cited confidentiality reasons for declining to disclose the sale price. The loan’s disposition from the trust is expected to be finalized in the near term. The servicer received an updated appraisal in October 2020 that valued the property at $32.8 million, a 36.9% decline in value from the issuance appraised value of $52.0 million, but in excess of the trust exposure to this loan of $24.7 million as of the February 2021 reporting.

The largest loan on the servicer’s watchlist, Prospectus ID#13 – Stamford Plaza Portfolio (representing 3.7% of the current pool balance), is secured by a portfolio of four adjacent Class A office buildings in Stamford, Connecticut. The four buildings form a contiguous office complex and total 985,992 sf. The loan was added to the servicer’s watchlist in October 2018 for a debt service coverage ratio below the 1.10 times (x) threshold due to the vacancy of three large tenants, which occupied 19.6% of the net rentable area at issuance. The office market has been quite soft in Stamford and these conditions, which have undoubtedly been exacerbated by the pandemic, have inhibited efforts to backfill the space. The in-place coverage has been reported at well below 1.0x since the YE2018 reporting period, with the borrower funding shortfalls and keeping the loan current to date. Given the low coverage ratio and limited prospects for backfilling the empty space, the loan has been on the DBRS Morningstar Hotlist since June 2019.

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-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 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 – Gateway Fashion Center (1.2% of the pool)
-- Prospectus ID#13 – Stamford Plaza Portfolio (3.7% of the pool)
-- Prospectus ID#14 – Denver Merchandise Mart (2.9% 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 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 [email protected].

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

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

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