CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed all seven rated classes of Deutsche Bank Securities, Inc.'s COMM 2014-CCRE14 commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this release.
KEY RATING DRIVERS
The affirmations are based on overall stable performance since issuance. As of the November 2016 distribution date, the pool's aggregate principal balance has been reduced by 2.4% to $1.35 billion from $1.38 billion at issuance. Three loans (6.4% of the pool) are currently on the servicer watchlist, but two of the loans (4.8%) have issues related to minor deferred maintenance or an occupancy decrease associated with seasonality and are not considered Fitch Loans of Concern. Fitch's Loans of Concern consist of three (1.7%) defaulted and specially serviced loans located in the Bakken Shale region, one (1.5%) of the watchlist loans, and one loan (2%) in the top 15 loans with an occupancy issue. Five loans (3.3%) are fully defeased.
Stable Overall Performance: Based on full-year 2015 financial statements, the pool's overall net operating income for those reporting financials has increased 3.1% since last year's rating action and 6.6% since issuance. The pool's Fitch stressed DSCR and LTV is 1.28x and 92.7% which is an improvement from the issuance metrics of 1.22x and 94.4%, respectively.
Loans of Concern: The largest Loan of Concern is the McKinley Mall, the 14th largest loan in the pool (2% of pool). The non-collateral anchor, Macy's, vacated its two spaces at the mall during the first half of 2016. Both parcels were purchased by a local developer, Benderson Development, in September 2016. Although the new owner has plans to redevelop and backfill the spaces, no decisions or prospects have been announced at this time. The collateral has exhibited stable performance with the year-end 2015 servicer-reported occupancy and debt service coverage ratio (DSCR) at 96% and 1.72x (times) compared to 97% and 1.80x at issuance, respectively. Fitch requested but did not receive an updated sales report from the master servicer. Fitch applied an additional stress to the property's cashflow and cap rate to reflect the increased vacancy for the whole property and the possibility of additional inline tenant vacancies as a result of losing a major anchor tenant.
The second largest Fitch Loan of Concern (1.5%) is secured by 16530 Ventura Boulevard, a 157,414 square foot (ft) suburban office building located in Encino, CA. The subject's occupancy and DSCR was a 87% and 1.32x as of year-end 2015 compared to 85% and 1.45x at issuance, respectively. According to servicer commentary, the building's cashflow has decreased as leases for 48% of the net rentable area expires during the next 12 months. Fitch will continue to monitor the loan as the sponsor updates the servicer on the leasing activity during the first half of the 2017.
Energy/North Dakota Exposure: Three loans (1.7% of the pool), each collateralized by multifamily properties located in the Bakken shale region of North Dakota, are in special servicing. The properties are located in Williston, Tioga, and Stanley, ND and are categorized as 60 or 90 days delinquent. Fitch assumed significant losses on these assets.
High Multifamily/Low Lodging and Retail Exposure: The second largest property type concentration is multifamily (21.3%), which is viewed favorably in Fitch analysis. Retail is relatively low at 13.1%, and hotel is lower than comparable 2012 transactions at 10.1%.
Interest-Only Loans: The pool amortizes by approximately 10.3% from aggregate cutoff balance to aggregate maturity balance. The pool includes four interest-only (IO) loans (27.7%) and 17 partial IO loans (34.1%).
Significant Additional Debt: The pool contains seven loans with pari passu debt (44.5%), six loans with subordinate financing (33%), and 14 loans allowing future subordinate debt (22.4%). Of the seven loans with pari passu debt, COMM 2014 CCRE14 PSA will govern the servicing of four loans (Google and Amazon Office Portfolio, 60 Hudson Street, 625 Madison Avenue, and McKinley Mall).
Pool Concentration: The 10 largest loans represent approximately 56.4% of the total pool balance. This is in line with the 2013 average of 54.5%.
The Rating Outlooks on all classes remain Stable. Fitch does not foresee negative ratings migration until a material economic or asset-level event changes the transaction's overall portfolio-level metrics.
USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10
No third-party due diligence was provided or reviewed in relation to this rating action.
Fitch has affirmed the following classes:
COMM 2014-CCRE14 Commercial Mortgage Pass-Through Certificates
--$34.1 million class A-1 at 'AAAsf'; Outlook Stable;
--$355.1 million class A-2 at 'AAAsf'; Outlook Stable;
--$85.6 million class A-SB at 'AAAsf'; Outlook Stable;
--$150 million class A-3 at 'AAAsf'; Outlook Stable;
--$317.3 million class A-4 at 'AAAsf'; Outlook Stable;
--$1.072* billion class X-A at 'AAAsf'; Outlook Stable;
--$130.9 million class A-M at 'AAAsf'; Outlook Stable;
*Notional amount and interest only.
Fitch does not rate the $98,162,000 class B, $275,540,000 exchangeable class PEZ, $46,497,000 class C, $43,054,000 class D, $30,998,000 class E, $15,499,000 class F, $48,220,377 class G, the $187,713,000 interest-only class X-B, or the $94,717,377 interest-only class X-C.
Additional information is available at www.fitchratings.com
Counterparty Criteria for Structured Finance and Covered Bonds (pub. 01 Sep 2016)
Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 16 Jun 2016)
Global Structured Finance Rating Criteria (pub. 27 Jun 2016)
North America and Asia-Pacific Multiborrower CMBS Surveillance Criteria (pub. 01 Dec 2016)
COMM 2014-CCRE14 Mortgage Trust -- Appendix
Dodd-Frank Rating Information Disclosure Form
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