DBRS Morningstar Confirms Ratings on All Classes of COMM 2014-LC15 Mortgage Trust

DBRS Limited (DBRS Morningstar) confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2014-LC15, issued by COMM 2014-LC15 as follows:

-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-M at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (sf)
-- Class PEZ at A (sf)
-- Class X-B at BBB (sf)
-- Class D at BBB (low) (sf)
-- Class E at B (low) (sf)
-- Class F at CCC (sf)

The trends on all classes are Stable, except Class F, which is assigned a rating that does not typically carry a trend in Commercial Mortgage-Backed Securities (CMBS) ratings.

The rating confirmations reflect the overall stable performance of the transaction since DBRS Morningstar’s last rating action. As of the February 2023 remittance, 38 of the original 48 loans remain in the trust, with an aggregate balance of approximately $606.8 million, representing a collateral reduction of 34.6% since issuance. Eleven loans have fully defeased, representing 32.8% of the pool balance. Five loans are in special servicing and two loans are on the servicer's watchlist, representing 12.6% and 8.4% of the pool balance, respectively.

The largest loan in special servicing is Marriott Downtown Hartford (Prospectus ID#8; 6.4% of the pool), which is secured by a full-service hotel in Hartford, Connecticut. The loan was transferred to the special servicer in July 2020 following the borrower’s requested pandemic relief in the form of a forbearance. A settlement agreement was executed in August 2022 and the borrower has since brought the loan current; it is currently pending return to the master servicer as a Corrected Mortgage Loan. The most recent appraisal reported by the servicer, dated July 2022, valued the property at $67.5 million, which is in line with the issuance appraisal value of $67.7 million.

Loan performance appears to be restabilizing following a dip during the pandemic. According to the most recent financial reporting, the loan reported a debt service coverage ratio (DSCR) of 1.30 times (x) for the trailing nine months ended September 30, 2022, compared with DSCRs of 0.02x, -0.39x, and 1.90x for YE2021, YE2020, and YE2019, respectively. As per the November 2022 STR report, the property reported a occupancy rate, average daily rate, and revenue per available room (RevPAR) of 57.8%, $181.39, and $104.78, respectively, for the trailing 12 months ended November 30, 2022. The property is outperforming its competitive set with a RevPAR penetration of 126.1%. Given these metrics, the asset’s desirable location within the Hartford central business district, and the loan’s pending return to the master servicer, DBRS Morningstar expects a continued stable to improved performance.

The second-largest specially serviced asset is the Hilton Garden Inn Houston (Prospectus ID#14; 2.9% of the pool balance). The loan had been in special servicing prior to the pandemic and became real estate owned in June 2021. The property is tentatively scheduled to be auctioned in April 2023, according to servicer reports. The most recent appraisal, dated October 2022, valued the property at $12.1 million, which is below the issuance value of $31.6 million and the outstanding loan balance of $17.7 million. Although the receiver continues stabilization efforts, given that occupancy and revenues dropped prior to the pandemic, DBRS Morningstar anticipates any near-term recovery in performance will be minimal and expects a loss severity in excess of 75.0% upon disposition.

The remaining three loans in special servicing represent less than 3.5% of the pool in aggregate. All DBRS Morningstar’s projected losses for loans in special servicing are contained to the unrated Class G certificate.

Environmental, Social, and Governance Considerations
There were no environmental, social, or governance factors that had a significant or relevant effect on the credit analysis.

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/396929 (May 17, 2022).

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.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is the North American CMBS Surveillance Methodology (October 3, 2022), 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.

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.

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

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