Morningstar DBRS Upgraded Credit Ratings on Four Classes and Confirmed Credit Ratings on Five Classes of COMM 2014-CCRE21 Mortgage Trust

DBRS Limited (Morningstar DBRS) upgraded the credit ratings on four classes of Commercial Mortgage Pass-Through Certificates, Series 2014-CCRE21 issued by COMM 2014-CCRE21 as follows:

-- Class B to AAA (sf) from AA (high) (sf)
-- Class X-B to AA (high) (sf) from A (high) (sf)
-- Class C to AA (sf) from A (sf)
-- Class PEZ to AA (sf) at A (sf)

Additionally, Morningstar DBRS confirmed the following credit ratings:

-- Class X-C at BB (low) (sf)
-- Class D at B (high) (sf)
-- Class E at B (low) (sf)
-- Class F at C (sf)
-- Class G at C (sf)

All trends are Stable, with the exception of Classes F and G, which are assigned credit ratings that do not typically carry trends in commercial mortgage-backed securities (CMBS) credit ratings.

The credit rating upgrades reflect the pool's large exposure to fully defeased loans (33.9% of the pool) and the significant deleveraging of the underlying pool since issuance because of continued paydowns and the overall stable-to-improving performance of the remaining collateral in the pool. Since Morningstar DBRS' last credit rating action in January 2024, 32 loans (formerly 74.9% of the pool at last review) were repaid in full, including two specially serviced loans, Kings Shops (Prospectus ID#3; formerly 8.4% of the pool) and Santa Fe Arcade (Prospectus ID#22; formerly 1.9% of the pool). Additionally, another specially serviced loan, 3137 Peach Orchard Road (Prospectus ID#53; formerly 0.4% of the pool), was liquidated from the trust at a loss that was in line with Morningstar DBRS' expectations. There has been an overall collateral reduction of 83.4% since issuance as of the November 2024 remittance, with only 14 of the original 59 loans remaining in the pool that are set to mature by YE2024, except for one recently modified loan in special servicing. Overall, Morningstar DBRS expects most of the remaining loans will ultimately repay in full, with projected liquidated losses generally contained to the C (sf) rated Class G certificate.

The transaction is generally well distributed by property type, and based on the most recent financials, the remaining loans reported a healthy weighted-average debt service coverage ratio and debt yield of approximately 1.53 times and 12.0%, respectively (excluding defeased loans). There are eight loans (39.7% of the pool) on the servicer's watchlist, which are predominantly monitored for upcoming loan maturity.

There remain challenges for the two specially serviced loans (26.5% of the pool) and select loans on the servicer's watchlist, supporting the C (sf) credit rating confirmation for the Class F certificate. In addition, interest shortfalls continue to accumulate, with Classes G through J shorted. There were total outstanding shortfalls of $4.0 million as of the November 2024 remittance. The servicer recently clawed back $5.8 million in advances deemed nonrecoverable for the largest specially serviced loan, Marine Club Apartments (Prospectus ID#9; 16.2% of the pool), reflecting an 85.4% reduction of the Class J certificate balance. Both specially serviced loans have reported updated appraisal values that are lower than what Morningstar DBRS considered at last review. Morningstar DBRS updated the liquidation scenarios to reflect those values and the resulting analysis determined that the most recent appraisal values could collectively withstand further declines of nearly 44.0% before Class F would be at risk of a loss.

The Marine Club Apartments loan is secured by a fractured condominium community in Philadelphia, with 204 of the total 301 units serving as collateral. The loan transferred to special servicing in October 2020 for payment default and has been delinquent since August 2020. Collateral occupancy was 70.6% per the June 2024 rent roll, a drop from the issuance figure of 91.0%, with an average rental rate that is well below the average asking rent of the Center City submarket, as of Q3 2024, suggesting the collateral performance has significantly deteriorated since issuance. Although information regarding the loan's workout has not been updated since 2023, Morningstar DBRS expects the lender to proceed with foreclosure as the borrower has stopped responding to matters pertaining to the property. An updated appraisal, dated August 2024, valued the property at $32.5 million, down from the issuance appraised value of $35.0 million, reflecting an as-is loan-to-value ratio of 89.3% (including accrued advances). Morningstar DBRS applied a haircut to the most recent value and liquidated the loan in the analysis for this review, resulting in an implied loss exceeding $19.0 million and a loss severity above 42.0%.

There are only two loans in the pool that are secured by office collateral (18.4% of the pool), the largest of which is the 12650 Ingenuity Drive loan (Prospectus ID#16; 10.3% of the pool) that is secured by an office building in Orlando. The loan transferred to special servicing in March 2024 for imminent default and was brought current as of the May 2024 payment period. A loan modification was executed in June 2024, the terms of which included an extension of the maturity date to December 2026, an $1.6 million principal paydown, as well as a conversion to interest-only (IO) payments. The loan is also cash managed with all excess cash being applied to pay down the principal balance. Although the loan modification suggests the sponsor has a longer-term commitment to the property, a May 2024 appraisal valued the property at $12.6 million, less than half of the issuance value. As such, Morningstar DBRS expects a loss will ultimately be incurred at disposition, projected at approximately $7.3 million based on the 2024 appraised value and expected liquidation expenses.

Morningstar DBRS' credit ratings on the applicable classes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transactions' respective press releases at issuance.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings at (August 13, 2024), https://dbrs.morningstar.com/research/437781.

Classes X-B and X-C 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 credit ratings are subject to surveillance, which could result in credit ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by Morningstar DBRS.

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

The principal methodology is North American CMBS Surveillance Methodology (March 1, 2024), https://dbrs.morningstar.com/research/428798.

Other methodologies referenced in this transaction are listed at the end of this press release.

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-DBRS@morningstar.com.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

Morningstar DBRS notes that a sensitivity analysis was not performed for this review as the transaction is in wind-down, with the outstanding loans nearing maturity. In such cases, Morningstar DBRS credit ratings are typically based on a recoverability analysis.

Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The Morningstar DBRS Long-Term Obligation Rating Scale definition indicates that credit 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.

DBRS Limited
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Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

-- North American CMBS Multi-Borrower Rating Methodology (March 1, 2024)
North American CMBS Insight Model v 1.2.0.0, https://dbrs.morningstar.com/research/428797
-- Rating North American CMBS Interest-Only Certificates (June 28, 2024),
https://dbrs.morningstar.com/research/435294
-- Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (September 19, 2024),
https://dbrs.morningstar.com/research/439702
-- North American Commercial Mortgage Servicer Rankings (August 23, 2024),
https://dbrs.morningstar.com/research/438283
-- Legal Criteria for U.S. Structured Finance (December 3, 2024),
https://dbrs.morningstar.com/research/444064

A description of how Morningstar DBRS analyzes structured finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/417279.

For more information on this credit or on this industry, visit https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.