DBRS Confirms Ratings on Citigroup Commercial Mortgage Trust 2014-GC25

DBRS Limited (DBRS) has today confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2014-GC25 issued by Citigroup Commercial Mortgage Trust 2014-GC25 as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- 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 X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class X-D at AAA (sf)
-- Class X-E at AAA (sf)
-- Class X-F at AAA (sf)
-- Class X-G at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (low) (sf)
-- Class PEZ at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (sf)
-- Class F at B (sf)

All trends are Stable. DBRS does not rate the first loss piece, Class G. The Class PEZ certificates are exchangeable with the Class A-S, Class B and Class C certificates (and vice versa).

The rating confirmations reflect that the transaction’s current performance remains in line with expectations since issuance in October 2014. The collateral consists of 62-fixed rate loans secured by 99 commercial properties. As of September 2015 remittance, the pool had an aggregate balance of approximately $839 million, representing a collateral reduction of 0.41% since issuance because of scheduled loan amortization. The transaction benefits from a concentration of high-quality properties as DBRS considers four loans, representing 26.3% of the current pool balance, to be secured by properties with Above Average property quality. This includes the largest loan, the Bank of America Plaza, which represents 13.1% of the current pool balance. The transaction is concentrated by loan size as the Top Ten loans represent 59.8% of the overall pool balance.

As of September 2015 remittance, there are no loans in special servicing and three loans on the servicer’s watchlist, representing 8.8% of the current pool balance. Two of these loans, the SMC Retail Portfolio (Prospectus ID#2, 7.35% of the current pool balance) and Simply Storage Grand Rapids (Prospectus ID#41, 0.65% of the current pool balance) are currently flagged because of minor outstanding insurance and tax advancements, respectively. In both instances, the servicer has issued a letter to the borrower requesting the shorted payments.

The third loan, 1250 Borreas Avenue (Prospectus ID#41, 0.83% of the current pool), is secured by a 42,541 square feet (sf) office property located in Sunnyvale, California. This loan has been flagged as the largest tenant, Adesto Technologies Corporation (51.5% of the net rentable area (NRA)), elected to vacate its space upon its August 2015 lease expiration date. As was expected at issuance, the second-largest tenant, eGain Corporation (eGain; 49.5% of the NRA) has assumed this space at a higher rental rate, increasing the annual base rent to $21.72 per sf (psf) compared with $16.18 psf in July 2014. eGain now fully occupies the entire building through March 2022. According to Q1 2015 reporting, the loan had an annualized debt service coverage ratio (DSCR) of 1.60 times (x) compared with the DBRS UW DSCR of 1.47x.

DBRS continues to monitor this transaction in its Monthly CMBS Surveillance Report, with additional information on the DBRS viewpoint for this transaction, including details on the largest loans in the pool and loans on the servicer’s watchlist. The September 2015 Monthly CMBS Surveillance Report for this transaction will be published shortly. If you are interested in receiving this report, contact us at info@dbrs.com.

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

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 to the right under Related Research or by contacting us at info@dbrs.com.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodologies are North American CMBS Rating Methodology (June 2015) and CMBS North American Surveillance (January 2015), which can be found on our website under Methodologies.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.