DBRS Confirms Ratings on COMM 2014-CCRE18 Mortgage Trust, Stable Trends

DBRS Limited (DBRS) has today confirmed all classes of Commercial Mortgage Pass-Through Certificates, Series 2014-CCRE18 (the Certificates) issued by COMM 2014-CCRE18 Mortgage Trust 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-5 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class A-M at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class PEZ at A (low) (sf)
-- Class X-B at BBB (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (low) (sf)
-- Class X-C at B (sf)
-- Class F at B (low) (sf)

All trends are Stable.

The rating confirmations reflects the overall stable performance exhibited by the transaction since issuance in 2014. The collateral consists of 49 fixed-rate loans secured by 60 commercial properties. As of the April 2017 remittance, all original loans remain in the pool with an aggregate principal balance of approximately $972.0 million, representing a collateral reduction of 2.5% since issuance as a result of scheduled loan amortization. One loan, Mellon Independence Center (Prospectus ID#3, 6.6% of the pool), is fully defeased.

The pool is primarily concentrated by four property types: seven loans, representing 31.9% of the pool, are secured by office properties; 14 loans (26.1% of the pool) are secured by retail properties; 11 loans (18.0% of the pool) are secured by multifamily properties; and nine loans (13.8% of the pool) are secured by hotel properties. By geographical location, the pool is relatively diverse, as the largest concentration by state is California with seven loans (18.4% of the pool) followed by New York with four loans (16.2% of the pool), Texas with five loans (10.6% of the pool) and Pennsylvania with four loans (9.9% of the pool). By loan size, the pool is fairly concentrated as the Top 10 and Top 15 loans represent 57.8% and 69.9% of the pool, respectively. As of YE2016, the largest loan, Bronx Terminal Market (Prospectus ID#1, 13.6% of the pool) shows healthy performance metrics with a debt service coverage ratio (DSCR) of 1.72 times (x) compared with the DBRS issuance figure of 1.58x, which reflects 9.0% net cash flow (NCF) growth. Three loans (16.8% of the pool) are structured with full interest-only (IO) terms, while an additional five loans (18.4% of the pool) have partial IO periods remaining, ranging from one month to 25 months.

To date, 44 loans (99.1% of the pool) have reported YE2016 NCF figures, while the remaining five loans (6.9% of the pool) have reported partial-year 2016 NCF figures only (all being Q3 2016). As calculated based on the most recent financials available (both partial-year and YE2016 NCFs), the transaction had a weighted-average (WA) amortizing DSCR and WA debt yield of 1.65x and 10.2%, respectively, compared with the DBRS issuance figures of 1.44x and 9.1%, respectively.

Based on the most recent NCF figures (both partial-year and YE2016), the Top 15 loans reported a WA amortizing DSCR of 1.70x compared with the DBRS issuance figure of 1.49x, which is reflective of a WA NCF growth of 13.1%. There are two loans (9.3% of the pool) in the Top 15 exhibiting NCF declines as compared with the DBRS issuance figures, with declines ranging from -8.8% to -22.9%. These two loans include Southfield Town Center (Prospectus ID#4, 6.7% of the pool) and Met Center 10 (Prospectus ID#10, 2.8% of the pool). While the decline in performance of Met Center 10 was driven by an increase in expenses, the decline in performance of Southfield Town Center was driven by increased vacancy. DBRS will monitor these loans for developments and has provided detailed commentary for each on the DBRS IReports platform.

As of the April 2017 remittance, there is one loan (1.3% of the pool) in special servicing, and six loans (6.8% of the pool) on the servicer’s watchlist. The loan in special servicing, the GreatStay Hotel Portfolio (Prospectus ID#23), is secured by four full-service hotels totalling 613-keys, all of which are located in the Pittsburg metropolitan statistical area of Pennsylvania. The loan was transferred to special servicing with the April 2017 remittance when the loan hit the 90-day delinquency mark. Of the six loans currently on the servicer’s watchlist, one loan (3.0% of the pool) was flagged because of deferred maintenance, four loans (3.5% of the pool) were flagged for performance-related reasons, while the remaining loan (0.4% of the pool) was flagged because of flood damage, with insurance claims made and renovations ongoing. Based on the most recent cash flow reporting (YE2016 NCFs), the four loans with performance-related decline reported a WA DSCR of 1.09x, compared with the DBRS issuance figure of 1.52x, which is reflective of a WA NCF decline of 17.2%.

DBRS has provided updated loan-level commentary and analysis for larger and/or pivotal watchlisted and specially serviced loans, as well as for the largest 15 loans in the pool, in the DBRS commercial mortgage-backed securities (CMBS) IReports platform. Registration is free. To view these and future loan-level updates provided as part of DBRS’s ongoing surveillance for this transaction, please register or log in at www.ireports.dbrs.com.

For more information on these rating actions, please contact us at info@dbrs.com.

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

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

The principal methodologies are the North American CMBS Rating Methodology (January 2017) and CMBS North American Surveillance (December 2016), which can be found on dbrs.com under Methodologies.

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