Morningstar DBRS Confirms All Classes of JPMCC Commercial Mortgage Securities Trust 2014-C20, Changes Trend on Two Classes to Stable

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

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

Morningstar DBRS changed the trends on Classes B and X-B to Stable from Negative, while Classes C and EC continue to have Negative trends. Classes D, E, F, and G have a credit rating that generally does not carry a trend in commercial mortgage-backed securities (CMBS) credit ratings.

The credit rating confirmations and change in trend on Classes B and X-B are reflective of Morningstar DBRS expectation that a full recovery of principal is likely to occur. As of the January 2025 remittance, Class B has an outstanding balance of approximately $5.0 million and based on the liquidation analysis for the three specially serviced loans, Morningstar DBRS expects there will be sufficient proceeds available to repay the outstanding balance of that certificate.

Morningstar DBRS also confirmed its credit ratings on all remaining classes and maintained the Negative trend on Classes C and EC. Interest shortfalls as of the January 2025 remittance total $8.2 million, which has increased from $6.5 million at the time of the last credit rating action in March 2024. Unpaid interest continues to accrue month over month, driven primarily by interest shortfalls deemed nonrecoverable from the largest and second-largest loans in special servicing. Morningstar DBRS' credit ratings are constrained by the expectation of accruing interest shortfalls prior to repayment and further credit rating action could be taken if full interest to the Class C certificate goes unpaid for an extended period of time, the primary consideration for the Negative trend. Classes D through G are already assigned credit ratings indicative of high expectation of loss and do not carry a trend at this time.

As of the January 2025 remittance, only five of the original 37 loans remain outstanding with a pool balance of $143.7 million, representing a collateral reduction of 83.6% since issuance. Since the last credit rating action, an additional nine loans were successfully repaid from the trust. Three of the five outstanding loans, representing 74.9% of the pool balance, are in special servicing and the two remaining loans remain with the master servicer with extended maturity dates in January 2026 and June 2029.

The largest loan in special servicing, 200 West Monroe (Prospectus ID#6; 30.2% of the pool balance), is secured by a 23-story, Class B office property in Chicago. The loan initially transferred to special servicing in February 2024 following the borrower's unwillingness to fund operating shortfalls. The loan was last paid through in December 2023. The special servicer is reportedly working to appoint a receiver to help stabilize the property for an eventual sale. According to the June 2024 rent roll, the property was 67.2% occupied, in line with the YE2023 figure of 68.3% but ultimately less than the 84.2% at issuance. Cash flow continues to decline year over year, with the loan reporting a YE2023 debt service coverage ratio of 0.21 times (x) a further decline from 0.49x at YE2022. The in-place tenant roster is considered granular, with no tenant representing more than 5.3% of the net rentable area (NRA). Leases, representing 6.7% of the NRA, are scheduled to expire by YE2025. According to a Q3 2024 Reis report, office properties within the Central Loop submarket experienced an average vacancy rate of 17.5%, up from 14.1% at YE2023. Although an updated appraisal has not been provided, Morningstar DBRS expects the property value has declined significantly since issuance given the high in-place vacancy, declined cash flow, weakening submarket fundamentals and lack of leasing activity. Morningstar DBRS' analysis for this loan included a liquidation scenario based on a 75% haircut to the issuance appraised value of $101 million, in addition to outstanding advances and expected servicer expenses. This analysis suggested a projected loss severity approaching 70%, or approximately $30 million.

The second-largest loan in special servicing, Lincolnwood Town Center (Prospectus ID#4; 29.5% of the pool balance), is backed by a regional mall in the northern Chicago suburb of Lincolnwood, Illinois. The property became real estate owned in August 2021. It was previously noted that the subject was under contract to be sold to a developer; however, the buyer failed to close on the transaction. Since the last credit rating action there has been no new appraisal delivered. The most recent appraisal dated April 2023, valued the property at $15.0 million, in line with the May 2022 appraised value, but a drastic decline from the issuance value of $89.1 million. In its analysis, Morningstar DBRS' liquidated the loan from the trust based on a 10% haircut to the April 2023 appraisal, in addition to outstanding advances and expected servicer expenses. The analysis suggested a loss severity in excess of 90% or approximately $40 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 factor(s) 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), https://dbrs.morningstar.com/research/437781.

Class X-B is an 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 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 (December 13, 2024), https://dbrs.morningstar.com/research/444617.

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 ratings were initiated at the request of the rated entity.

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

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

These are solicited credit ratings.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process. 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.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS' outlooks and credit ratings are monitored.

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
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 (December 13, 2024), https://dbrs.morningstar.com/research/444616
-- Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (September 19, 2024), https://dbrs.morningstar.com/research/439702
-- Legal Criteria for U.S. Structured Finance (December 3, 2024), https://dbrs.morningstar.com/research/444064
-- North American Commercial Mortgage Servicer Rankings (August 23, 2024), https://dbrs.morningstar.com/research/438283

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 (July 17, 2023).

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