DBRS Morningstar Downgrades Six Classes of JPMCC Commercial Mortgage Securities Trust 2014-C20

DBRS Limited (DBRS Morningstar) downgraded the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2014-C20 issued by JPMCC Commercial Mortgage Securities Trust 2014-C20 as follows:

-- Class C to BBB (high) (sf) from A (low) (sf)
-- Class EC to BBB (high) (sf) from A (low) (sf)
-- Class D to CCC (sf) from BB (low) (sf)
-- Class E to C (sf) from B (low) (sf)
-- Class F to C (sf) from CCC (sf)
-- Class G to C (sf) from CCC (sf)

In addition, DBRS Morningstar confirmed the following classes:

-- 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 AA (sf)
-- Class B at AA (low) (sf)

DBRS Morningstar changed the trends for Classes X-B and B to Negative from Stable. Classes C and EC continue to have Negative trends. Classes D, E, F, and G have ratings that do not carry trends. DBRS Morningstar also designated Classes D, E, F, and G as having Interest in Arrears. All other classes have Stable trends.

The rating downgrades and Negative trends reflect the increased risk of loss to the trust for select loans in the pool. As of the December 2021 remittance, 25 of the original 37 loans remain in the pool, representing a collateral reduction of 36.0% since issuance. Three loans, representing 6.1% of the pool balance, are fully defeased. There are three loans in special servicing and five loans on the servicer’s watchlist, representing 13.4% and 23.1% of the pool balance, respectively.

The rating downgrades are generally reflective of DBRS Morningstar’s loss projections for the two largest loans in special servicing. The largest is Lincolnwood Town Center (Prospectus ID#4, 7.9% of the pool balance), which is secured by a regional mall in the northern Chicago suburb of Lincolnwood, Illinois. The loan has been in special servicing since May 2020. Most recently, the servicer reported a value decline to $15.2 million, down drastically from the issuance value of $89.1 million, suggesting that a significant loss will be realized at disposition. The second-largest loan in special servicing is University Gate Apartments (Prospectus ID#15, 3.4% of the pool balance), secured by a student housing apartment complex in Erie, Pennsylvania. The loan has been in special servicing since 2018 and has been real estate owned since late 2020. Based on the most recent appraised value of $13.3 million, DBRS Morningstar expects a significant loss at resolution. For further information on these two loans, please see the loan commentary on the DBRS Viewpoint platform, for which information has been provided below.

The Negative trends reflect DBRS Morningstar’s concerns with two large loans in the top 15, both of which are currently on the servicer’s watchlist for performance declines. The largest of these loans, 200 West Monroe (Prospectus ID#6, 8.6% of the pool balance), is secured by a Class B office building in downtown Chicago that has struggled since losing a major tenant in 2017. The Westminster Mall loan (Prospectus ID#11, 4.6% of the pool balance) is secured by a regional mall in Orange County, California, and is also on the servicer’s watchlist for performance declines related to occupancy disruptions. The loan benefits from the property’s highly visible location near several major transportation arteries; furthermore, the loan sponsor, Washington Prime Group, has reportedly been in discussions to partner with another firm to develop land adjacent to the collateral property. Both of these large watchlisted loans are current with sponsors who appear committed to the respective properties and loans, but the increased risks from issuance will be monitored closely for further development. For additional information on these loans, please see the DBRS Viewpoint platform.

At issuance, DBRS Morningstar shadow-rated The Outlets at Orange (Prospectus ID#1, 16.0% of the pool balance) investment grade. With this review, DBRS Morningstar confirms that the performance of the loan remains consistent with investment-grade loan characteristics.

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 – Lincolnwood Town Center (7.9% of the pool)
-- Prospectus ID#6 – 200 West Monroe (8.6% of the pool)
-- Prospectus ID#11 – Westminster Mall (4.6% of the pool)
-- Prospectus ID#15 – University Gate Apartments (3.4% of the pool)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com. The platform includes 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 26, 2021), 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.

The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482/baseline-macroeconomic-scenarios-application-to-credit-ratings.

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. 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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