Morningstar DBRS Confirms All Credit Ratings of COMM 2014-CCRE18 Mortgage Trust, Changes Trends on Three Classes to Stable from Negative

DBRS, Inc. (Morningstar DBRS) confirmed all credit ratings on the classes of Commercial Mortgage Pass-Through Certificates, Series 2014-CCRE18 issued by COMM 2014-CCRE18 Mortgage Trust as follows:

-- Class D at BBB (low) (sf)
-- Class E at B (low) (sf)
-- Class F at C (sf)
-- Class X-B at BBB (sf)

Morningstar DBRS changed the trends on Classes X-B, D, and E to Stable from Negative. Class F has a credit rating that typically does not carry a trend in commercial mortgage-backed securities (CMBS) credit ratings.

Since the previous credit rating action in March 2024, a total of 29 loans have been repaid in full, contributing to a principal repayment of nearly $400.0 million, leaving the trust with a current balance of $61.5 million as of the December 2024 reporting. The credit rating confirmations reflect Morningstar DBRS' recoverability expectations for the two remaining loans, Southfield Town Center (Prospectus ID#4, 87.5% of the pool) and Bristol Village (Prospectus ID#33, 12.5% of the pool). Both loans are in special servicing for default, after failing to repay upon their scheduled maturities in May 2024; however, recent appraisals indicate improved values since issuance.

Given the concentration of defaulted loans remaining, Morningstar DBRS' analysis considered conservative liquidation scenarios for both loans, based on stresses to the most recent appraised values to determine the recoverability of the outstanding bonds. Morningstar DBRS concluded that the senior certificates, including Classes D and E, continue to be insulated from losses, while Class F continues to be exposed to loss given the reduced credit support of the nonrated Class G since issuance, which has a principal balance of only $3.6 million. In addition, the Class F certificate has been shorted interest since February 2024, exceeding Morningstar DBRS' tolerance levels, and the timing for recoverability is likely to be extended, further exposing the trust to expenses and interest shortfalls, further supporting the credit rating of C (sf).

With this credit rating action, Morningstar DBRS also changed the trends on Classes D and E to Stable from Negative. This is reflective of the slight improvement in performance of both loans since the last review. Both assets have received updated appraisals, which indicate that, even in a stressed value scenario, Classes D and E are likely to be recovered.

The larger of the two loans, Southfield Town Center, transferred to special servicing in February 2024 for imminent maturity default. The loan is secured by a 2.15 million-square-foot (sf), five-building suburban office property in the Detroit suburb of Southfield, Michigan. According to the servicer's commentary, the borrower was unsuccessful in its attempts to secure takeout financing prior to the May 2024 maturity date and has engaged a workout advisor. The special servicer has submitted a forbearance agreement to the lender for approval, and the lender has indicated it will be dual tracking foreclosure while documenting the agreement. As of the YE2023 reporting, the property reported a net cash flow (NCF) of $18.4 million (debt service coverage ratio (DSCR) of 2.07 times (x)), which represents an increase over the YE2022 and Morningstar DBRS figures of $17.8 million (DSCR of 2.00x) and $14.5 million (DSCR of 1.63x), respectively. Occupancy remained relatively flat since issuance, with the property reporting a YE2023 figure of 77.0%, which is in line with the YE2022 figure of 79.0%, but an increase from the 67.0% occupancy at issuance. The property was reappraised in May 2024 at $216.9 million, nearly a 20% improvement over the issuance appraised value of $181.0 million.

The Bristol Village loan is secured by a 25,075-sf retail center in Costa Mesa, California. The loan transferred to special servicing ahead of its May 2024 maturity date. According to the servicer's commentary, the borrower and special servicer are in negotiations for a potential forbearance, and the borrower is likely to pay off by the end of March 2025. Per the YE2023 reporting, the property reported an NCF of $0.8 million (DSCR of 2.16x), which marks a decrease from the YE2022 NCF of $0.9 million (DSCR of 2.33x). Occupancy fell year over year as well, with the property reporting a YE2023 figure of 89.0%, a slight decrease from the YE2022 occupancy of 93.0%. The property was reappraised in June 2024 at $14.1 million, nearly a 10% improvement over the issuance appraised value of $12.9 million.

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 (August 13, 2024) at https://dbrs.morningstar.com/research/437781.

Class X-B is an interest-only (IO) certificate that references 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 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 traditional model-based sensitivity was not performed; however, Morningstar DBRS notes that the credit ratings are sensitive to the recoverability assumptions on the two remaining loans that are detailed in the accompanying press release. Should recoverability of the remaining loans be lower than that implied by the stressed values in the latest analysis, credit ratings lower in the capital stack would be those most negatively impacted.

DBRS, Inc.
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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 version 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

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