NEW YORK--(BUSINESS WIRE)--Fitch Ratings has assigned the following ratings and Rating Outlooks to WFRBS Commercial Mortgage Trust 2014-LC14 commercial mortgage pass-through certificates:
--$66,263,000 Class A-1 'AAAsf'; Outlook Stable;
--$189,675,000 Class A-2 'AAAsf'; Outlook Stable;
--$175,000,000 Class A-4 'AAAsf'; Outlook Stable;
--$278,492,000 Class A-5 'AAAsf'; Outlook Stable;
--$89,487,000 Class A-SB 'AAAsf'; Outlook Stable;
--$95,739,000b Class A-S 'AAAsf'; Outlook Stable;
--$974,656,000* Class X-A 'AAAsf'; Outlook Stable;
--$193,048,000* Class X-B 'BBB-sf'; Outlook Stable;
--$81,614,000b Class B 'AA-sf'; Outlook Stable;
--$47,085,000b Class C 'A-sf'; Outlook Stable;
--$224,438,000b Class PEX 'A-sf'; Outlook Stable;
--$80,000,000a Class A-3FL 'AAAsf'; Outlook Stable;
--$0a Class A-3FX 'AAAsf'; Outlook Stable;
--$64,349,000a Class D 'BBB-sf'; Outlook Stable;
--$21,973,000a Class E 'BBsf'; Outlook Stable;
--$12,556,000a Class F 'Bsf'; Outlook Stable.
(*) Notional amount and interest-only.
(a) Privately placed pursuant to Rule 144A.
(b) Class A-S, B and C certificates may be exchanged for class PEX certificates; and class PEX certificates may be exchanged for class A-S, B and C certificates.
Fitch does not rate the $87,892,034 class X-C or the $53,363,034 class G. Since Fitch issued its expected ratings on Jan. 28, 2014, the class A-3 was removed and the expected rating for that class was withdrawn. Additionally, two classes were added to the deal structure (A-3FL and A-3FX). The classes above reflect the final ratings and deal structure.
The certificates represent the beneficial ownership in the trust, primary assets of which are 71 loans secured by 144 commercial properties having an aggregate principal balance of approximately $1.26 billion as of the cutoff date. The loans were contributed to the trust by Wells Fargo Bank, National Association; Ladder Capital Finance LLC; Rialto Mortgage Finance, LLC; The Royal Bank of Scotland plc.' and RBS Financial Products Inc.
Fitch reviewed a comprehensive sample of the transaction's collateral, including site inspections on 74.1% of the properties by balance, cash flow analysis and asset summary reviews of 84.3% of the pool.
KEY RATING DRIVERS
Fitch Leverage: The pool has higher Fitch leverage, with a weighted average Fitch LTV and DSCR of 101.7% and 1.19x, respectively. The average 2012 Fitch DSCR and LTV were 1.24x and 97.2%, respectively. The average 2013 Fitch DSCR and LTV were 1.29x and 101.6%, respectively.
Credit Opinion Loan: The third largest loan in the pool (6.4%) has a Fitch credit opinion of 'BBB-sf' on a stand-alone basis. The loan is secured by The Outlet Collection ' Jersey Gardens, a 1.3 million square foot (sf) outlet mall located in Elizabeth, NJ. This loan has a pari passu participation held outside the trust, and servicing of the loan will be governed by the pooling and servicing agreement (PSA) of WFRBS 2013-C18.
Lower Concentration: Loan concentration is slightly lower than recent transactions. The largest loan represents 11.1% of the pool, and the top 10 loans represent 48.6%. The average top 10 concentrations for full year 2013 and 2012 conduit transactions were 54.3% and 54.2%, respectively. The LCI is 362 and the SCI is 371, which indicate an average level of loan diversity and an above-average level of sponsor diversity. The 2013 average LCI was 367 and the 2013 average SCI was 458.
For this transaction, Fitch's net cash flow (NCF) was 8.0% below the most recent net operating income (NOI) (for properties for which historical NOI was provided, excluding properties that were stabilizing during the most recent reporting period). Unanticipated further declines in property-level NCF could result in higher defaults and loss severity on defaulted loans, and could result in potential rating actions on the certificates. Fitch evaluated the sensitivity of the ratings assigned to WFRBS 2014-LC14 certificates and found that the transaction displays average sensitivity to further declines in NCF. In a scenario in which NCF declined a further 20% from Fitch's NCF, a downgrade of the junior 'AAAsf' certificates to 'A-sf' could result. In a more severe scenario, in which NCF declined a further 30% from Fitch's NCF, a downgrade of the junior 'AAAsf' certificates to 'BBB-sf' could result. The presale report includes a detailed explanation of additional stresses and sensitivities on pages 79 - 80.
The master servicer will be Wells Fargo Bank, National Association, rated 'CMS1-' by Fitch. The special servicer will be Rialto Capital Advisors, LLC rated 'CSS2-' by Fitch.
The presale report is available at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Criteria for Analyzing Multiborrower U.S. Commercial Mortgage Transactions (Aug. 2013);
--Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions (Sept. 2013);
--Global Structured Finance Rating Criteria (May 2013);
--U.S. Commercial Mortgage Servicer Rating Criteria (Feb. 18, 2011);
--U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (Dec. 2013);
--Counterparty Criteria for Structured Finance and Covered Bonds (May 2013);
Applicable Criteria and Related Research:
Counterparty Criteria for Structured Finance and Covered Bonds
Criteria for Analyzing Multiborrower U.S. Commercial Mortgage Transactions
Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions
Global Structured Finance Rating Criteria
U.S. Commercial Mortgage Servicer Rating Criteria -- Effective Feb. 18, 2011 to Feb. 14, 2014
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria