DBRS Morningstar Confirms All Classes of Citigroup Commercial Mortgage Trust 2014-GC19

DBRS, Inc. (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass-Through Certificates, Series 2014-GC19 issued by Citigroup Commercial Mortgage Trust 2014-GC19 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 B at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class PEZ at AA (sf)
-- Class C at AA (sf)
-- Class D at BBB (high) (sf)
-- Class X-C at BBB (sf)
-- Class E at BBB (low) (sf)
-- Class X-D at BB (high) (sf)
-- Class F at BB (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction. As of the December 2021 remittance, 67 of the original 78 loans remain in the pool, with an aggregate trust balance of $692.3 million, representing a collateral reduction of approximately 31.9% since issuance due to loan repayments, scheduled loan amortization, and the liquidation of a single loan that resulted in a small loss to the trust in June 2021. Twenty-two loans, representing 28.9% of the current trust balance, have been fully defeased. There is one loan in special servicing (1.7% of the current pool balance). Since DBRS Morningstar’s last review of this transaction, two specially serviced loans—Berwyn Shopping Center (Prospectus ID#29) and Ramada Denver (Prospectus ID#49)—returned to the master servicer unchanged and the 334-336 West 46th Street loan (Prospectus ID#35) was liquidated, resulting in a $1.4 million loss to the trust. There are also nine loans (15.7% of the current pool balance) on the servicer’s watchlist. These loans are being monitored for a variety of reasons, including deferred maintenance issues, debt coverage, and performance declines as a result of ongoing difficulties caused by the Coronavirus Disease (COVID-19) pandemic. The transaction is concentrated by property type, as loans secured by retail, multifamily, and mixed-use properties represent 28.7%, 25.3%, and 24.0% of the current trust balance, respectively.

The $11.8 million loan is secured by the borrower's fee-simple interest in a 108,356-square-foot (sf) shopping center in Montgomery, Alabama, which has a DBRS Morningstar Market Rank of 2. The 10-year loan amortizes on a 30-year schedule through its maturity in January 2024. The loan’s transfer to special servicing in May 2020 was due to imminent monetary default after the borrow requested pandemic-related relief. The primary driver for the relief request was rent loss, stemming from the property’s largest tenant, AMC Theatres (AMC; 54.4% of the net rentable area), which closed its doors in late March 2020 and reopened with an abbreviated schedule in August 2020. Although AMC originally had a December 2020 lease expiration, the servicer indicated the tenant’s lease was extended through December 2023, albeit with significant concessions. Despite the renewal and the loan reporting a debt service coverage ratio (DSCR) for the first half of 2021 that was above breakeven, the loan remains delinquent as it appears the borrower continues to request debt service relief related to the missed payments. The borrower has consented to the appointment of a receiver.

An updated appraisal from October 2021 valued the collateral at $9.2 million, which is down 49.4% from the issuance appraisal of $18.1 million. The property was 82% occupied as of the June 2021 rent roll, which is down slightly from the issuance occupancy of 87%. Despite maintaining relatively stable occupancy, the YE2020 net cash flow was down 45.4% since issuance from the loss of rent from the movie theater. The drop in cash flow resulted in a below breakeven DSCR of 0.79 times as of YE2020.

The largest watchlisted loan in the pool is the 136-138 West 34th Street (Prospectus ID#7, 4.3% of pool). The $30.0 million loan is secured by the borrower's fee-simple interest in a 25,000-sf retail building along 34th Street in Midtown Manhattan, New York, which has a DBRS Morningstar Market Rank of 8. The 10-year loan pays interest only (IO) through its maturity in January 2024. Loan proceeds were used to refinance existing debt.

Occupancy decreased to its current level of 50% after Sprint Spectrum, one of the property’s two tenants at issuance, exercised an early termination option and vacated in December 2020 prior to its November 2023 lease expiration. Sprint Spectrum paid a termination fee of $1.2 million, which is being held in reserve. The property’s remaining tenant, Kay Jewelers, has a lease expiration in December 2024. The departure of Sprint Spectrum resulted in the Q3 2021 DSCR to fall below breakeven.

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, and PEZ are 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#7 – 136-138 West 34th Street (4.3% of the pool)
-- Prospectus ID#19 – Festival Plaza (1.7% 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 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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