CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed 14 classes of Deutsche Bank Securities, Inc.'s (COMM) commercial mortgage pass-through certificates series 2014-CCRE18. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The affirmations reflect the transaction's stable performance since issuance. As of the May 2015 distribution date, the pool's aggregate principal balance has been reduced by 14.7% to $990.9 million from $1.16 billion at issuance. No loans are defeased. Full year-end (YE) or partial year 2014 financials were reported by 59.7% of the pool. There is limited amortization within the pool. Three loans (16.5% of the pool), including the largest loan and another in the top 15, are full-term interest only; 47.5% of the pool have an interest-only period.
The largest loan in the pool is the Bronx Terminal Market loan (13.6% of the pool), which is secured by a 912,333 square foot (sf), multilevel retail power center located in Bronx, NY. The property was developed by the sponsor in 2009 and consists of two towers, which are connected via a six-level parking garage. The largest tenants include Target, BJs and Home Depot. The debt service coverage ratio (DSCR) was reported to be 1.93x as of March 2015 compared to 1.75x at issuance. Occupancy was reported to be 99%, which is in line with the occupancy at issuance.
The next largest loan in the pool is the Pacific Design Center loan (9.6%). The loan is collateralized by 1.0 million-sf of a 1.4 million-sf mixed-use facility located in West Hollywood, CA. The property consists of three buildings and is 72% utilized as a design center, with the remaining 28% built out as office space. The property's largest tenant (21.1% of NRA) has a lease expiration in January 2017, with the borrower continuing to negotiate an extension. Occupancy has increased to 69% as of September 2014 compared to 66% at issuance leading to a higher DSCR of 1.95x, an increase from the 1.65x at issuance.
The third largest loan in the pool is the Mellon Independence loan (6.6%), which is secured by a 718,085-sf retail and office property in the Market Street East section of Philadelphia, PA. The property, formerly known as the Lit Brothers Building, built in 1895, has been altered and expanded over the years to become the only full-block of Victorian architecture in Philadelphia. Mellon Bank currently leases 153,000-sf, with approximately 49,000-sf of that space under sublease to another tenant, with a lease expiration of Dec. 31, 2015. Mellon Bank is currently discussing a renewal but has indicated it will downsize at the time of lease expiration. The sublease tenant has not indicated if it plans to sign a new lease upon expiration. A leasing cost reserve of $5,000,000 was funded at the loan closing and is held in escrow to fund any future leasing costs for rolling and vacant space. At year-end 2014, the DSCR was reported to be 2.16x, while occupancy was reported to be 84%.
RATING SENSITIVITIES
The Rating Outlook for all classes remains Stable due to stable collateral performance. Fitch does not foresee positive or negative ratings migration until a material economic or asset-level event changes the transaction's portfolio-level metrics.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch affirms the following classes:
--$41.6 million class A-1 at 'AAAsf'; Outlook Stable;
--$139.7 million class A-2 at 'AAAsf'; Outlook Stable;
--$53.6 million class A-SB at 'AAAsf'; Outlook Stable;
--$20.4 million class A-3 at 'AAAsf'; Outlook Stable;
--$195 million class A-4 at 'AAAsf'; Outlook Stable;
--$241.7 million class A-5 at 'AAAsf'; Outlook Stable;
--$753.0 million* class X-A at 'AAAsf'; Outlook Stable;
--$61 million class A-M at 'AAAsf'; Outlook Stable;
--$58.5 million class B at 'AA-sf'; Outlook Stable;
--$165.6 million class PEZ at 'A-sf'; Outlook Stable;
--$46.1 million class C at 'A-sf'; Outlook Stable;
--$158.2 million* class X-B at 'BBB-sf'; Outlook Stable;
--$53.6 million class D at 'BBB-sf'; Outlook Stable;
--$26.2 million class E at 'BB-sf'; Outlook Stable.
*Notional and interest-only.
Fitch does not rate the class F, G and X-C certificates. Class A-M, B and C certificates may be exchanged for class PEZ certificates, and class PEZ certificates may be exchanged for class A-M, B and C certificates.
Additional information is available at www.fitchratings.com.
Applicable Criteria
Global Structured Finance Rating Criteria (pub. 31 Mar 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864268
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (pub. 10 Dec 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608
Additional Disclosures
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=986268
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
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