Press Release

DBRS Morningstar Downgrades Four Classes of JPMBB Commercial Mortgage Securities Trust 2014-C25

CMBS
March 01, 2021

DBRS Limited (DBRS Morningstar) downgraded its ratings on four classes of the Commercial Mortgage Pass-Through Certificates, Series 2014-C25 issued by JPMBB Commercial Mortgage Securities Trust 2014-C25 as follows:

-- Class X-E to B (high) (sf) from BB (high) (sf)
-- Class E to B (sf) from BB (sf)
-- Class X-F to B (sf) from BB (low) (sf)
-- Class F to B (low) (sf) from B (high) (sf)

In addition, DBRS Morningstar confirmed its ratings on the remaining classes as follows:

-- 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)

Classes X-D, D, X-E, E, X-F, and F were removed from Under Review with Negative Implications, where they were placed on August 6, 2020, and carry Negative trends. All other trends are Stable.

The rating downgrades and Negative trends reflect DBRS Morningstar’s concerns surrounding the nine loans in special servicing, four of which were liquidated with losses to the trust in the analysis for this review. As of the February 2021 remittance, the initial trust balance of $1.1 billion had been reduced by 18.6% to $963.9 million, with 57 of the original 65 loans remaining in the pool. The transaction is concentrated by property type, as 12 loans, representing 34.1% of the pool, are secured by office assets and 18 loans, representing 32.6% of the pool, are secured by retail properties or mixed-use portfolios that are primarily composed of retail assets. The second-largest loan in the pool is Grapevine Mills (Prospectus ID#3, 7.6% of the pool), which is secured by an outlet mall in Grapevine, Texas, a Dallas suburb. The mall is owned and operated by an affiliate of Simon Property Group (Simon) and is currently performing with no outstanding relief request or history of delinquency since the start of the Coronavirus Disease (COVID-19) pandemic. Additionally, there are six loans, representing 9.6% of the pool, that are fully defeased.

As of the February 2021 remittance, 10 loans, representing 8.4% of the pool, were on the servicer’s watchlist, and there were nine loans, representing 17.5% of the pool, in special servicing. The loans on the watchlist are being monitored for various reasons, including low debt service coverage ratio or occupancy, tenant rollover risk, and deferred maintenance.

The largest loan in special servicing, Mall at Barnes Crossing and Market Center Tupelo (Prospectus ID#4, 6.6% of the pool), is secured by a 569,000-square-foot (sf) portion of a 670,000-sf regional mall and an adjacent 60,000-sf retail center in Tupelo, Mississippi. The loan sponsor is an affiliate of Brookfield Property Partners L.P. (Brookfield; rated BBB with a Negative trend by DBRS Morningstar), and the loan transferred to special servicing in December 2020 for imminent monetary default. The regional mall lost one of its anchor tenants, Sears (13.0% of net rentable area (NRA)), in 2018, and the space has yet to be backfilled.

Total collateral occupancy had declined to 79.0% as of September 2020 from a high of 96.0% at YE2018. The regional mall is also anchored by Belk, Belk Home and Men’s (14.2% of NRA), JCPenney (14.4% of NRA), and Dick’s Sporting Goods (7.9% of NRA). Belk recently filed for bankruptcy, and the regional department store chain’s future is in substantial doubt, a situation that could mean additional anchor closures in the near term. The JCPenney anchor’s future is similarly uncertain, but the outlook is slightly superior to Belk’s given JCPenney’s acquisition out of bankruptcy by a joint venture that included Brookfield and Simon. The workout strategy for this loan is yet to be determined; however, the loan was 90 days to 120 days delinquent as of the February 2021 remittance, and DBRS Morningstar notes that Brookfield has publicly expressed plans to shed underperforming properties from its portfolio over the near term. In the analysis for this review, a substantial probability of default penalty was applied to increase the expected loss for this loan.

The second-largest loan in special servicing, Hilton Houston Post Oak (Prospectus ID#6, 4.4% of the pool), is secured by a 448-key full-service hotel in Houston, approximately one block north of the Houston Galleria mall. The loan was more than 121 days delinquent as of the February 2021 remittance and was transferred to special servicing in May 2020. Although the transfer was said to be driven by the coronavirus pandemic’s impact on property cash flows, DBRS Morningstar notes that the property had been significantly underperforming issuance expectations for several years.

The servicer’s commentary indicates that the workout strategy for this loan is a deed in lieu of foreclosure. A September 2020 appraisal obtained by the special servicer valued the collateral at $57.5 million, a decline of 54.0% from the appraised value of $126.2 million at issuance. Based on a significant haircut to this valuation, which was applied given the uncertainty for both the lodging industry and demand in the Houston area, this loan was liquidated in the analysis, resulting in a loss severity in excess of 50.0%.

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, 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 – Mall at Barnes Crossing and Market Center Tupelo (6.6% of the pool)
-- Prospectus ID#6 – Hilton Houston Post Oak (4.4% of the pool)
-- Prospectus ID#13 – Southport Plaza (2.6% 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 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@dbrsmorningstar.com.

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 info@dbrsmorningstar.com.

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577

Ratings

  • Date IssuedDebt RatedRatingTrendActionAttributesi
    01-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2014-C25, Class A-4A1AAA (sf)StbConfirmed
    CA
    01-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2014-C25, Class A-4A2AAA (sf)StbConfirmed
    CA
    01-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2014-C25, Class A-5AAA (sf)StbConfirmed
    CA
    01-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2014-C25, Class A-SAAA (sf)StbConfirmed
    CA
    01-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2014-C25, Class A-SBAAA (sf)StbConfirmed
    CA
    01-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2014-C25, Class X-AAAA (sf)StbConfirmed
    CA
    01-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2014-C25, Class X-BAAA (sf)StbConfirmed
    CA
    01-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2014-C25, Class BAA (high) (sf)StbConfirmed
    CA
    01-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2014-C25, Class X-CAA (low) (sf)StbConfirmed
    CA
    01-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2014-C25, Class CA (high) (sf)StbConfirmed
    CA
    01-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2014-C25, Class ECA (high) (sf)StbConfirmed
    CA
    01-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2014-C25, Class X-DBBB (sf)NegConfirmed
    CA
    01-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2014-C25, Class DBBB (low) (sf)NegConfirmed
    CA
    01-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2014-C25, Class X-EB (high) (sf)NegDowngraded
    CA
    01-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2014-C25, Class EB (sf)NegDowngraded
    CA
    01-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2014-C25, Class X-FB (sf)NegDowngraded
    CA
    01-Mar-21Commercial Mortgage Pass-Through Certificates, Series 2014-C25, Class FB (low) (sf)NegDowngraded
    CA
    More
    Less
JPMBB Commercial Mortgage Securities Trust 2014-C25
  • Date Issued:Mar 1, 2021
  • Rating Action:Confirmed
  • Ratings:AAA (sf)
  • Trend:Stb
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Mar 1, 2021
  • Rating Action:Confirmed
  • Ratings:AAA (sf)
  • Trend:Stb
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Mar 1, 2021
  • Rating Action:Confirmed
  • Ratings:AAA (sf)
  • Trend:Stb
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Mar 1, 2021
  • Rating Action:Confirmed
  • Ratings:AAA (sf)
  • Trend:Stb
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Mar 1, 2021
  • Rating Action:Confirmed
  • Ratings:AAA (sf)
  • Trend:Stb
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Mar 1, 2021
  • Rating Action:Confirmed
  • Ratings:AAA (sf)
  • Trend:Stb
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Mar 1, 2021
  • Rating Action:Confirmed
  • Ratings:AAA (sf)
  • Trend:Stb
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Mar 1, 2021
  • Rating Action:Confirmed
  • Ratings:AA (high) (sf)
  • Trend:Stb
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Mar 1, 2021
  • Rating Action:Confirmed
  • Ratings:AA (low) (sf)
  • Trend:Stb
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Mar 1, 2021
  • Rating Action:Confirmed
  • Ratings:A (high) (sf)
  • Trend:Stb
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Mar 1, 2021
  • Rating Action:Confirmed
  • Ratings:A (high) (sf)
  • Trend:Stb
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Mar 1, 2021
  • Rating Action:Confirmed
  • Ratings:BBB (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Mar 1, 2021
  • Rating Action:Confirmed
  • Ratings:BBB (low) (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Mar 1, 2021
  • Rating Action:Downgraded
  • Ratings:B (high) (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Mar 1, 2021
  • Rating Action:Downgraded
  • Ratings:B (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Mar 1, 2021
  • Rating Action:Downgraded
  • Ratings:B (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:CA
  • Date Issued:Mar 1, 2021
  • Rating Action:Downgraded
  • Ratings:B (low) (sf)
  • Trend:Neg
  • Rating Recovery:
  • Issued:CA
  • US = Lead Analyst based in USA
  • CA = Lead Analyst based in Canada
  • EU = Lead Analyst based in EU
  • UK = Lead Analyst based in UK
  • E = EU endorsed
  • U = UK endorsed
  • Unsolicited Participating With Access
  • Unsolicited Participating Without Access
  • Unsolicited Non-participating

ALL MORNINGSTAR DBRS RATINGS ARE SUBJECT TO DISCLAIMERS AND CERTAIN LIMITATIONS. PLEASE READ THESE DISCLAIMERS AND LIMITATIONS AND ADDITIONAL INFORMATION REGARDING MORNINGSTAR DBRS RATINGS, INCLUDING DEFINITIONS, POLICIES, RATING SCALES AND METHODOLOGIES.