NEW YORK--(BUSINESS WIRE)--Fitch Ratings has issued a presale report on Deutsche Bank Securities, Inc.'s COMM 2014-CCRE19 Commercial Mortgage Trust Pass-Through Certificates.
Fitch expects to rate the transaction and assign Rating Outlooks as follows:
--$69,931,000 class A-1 'AAAsf'; Outlook Stable;
--$168,679,000 class A-2 'AAAsf'; Outlook Stable;
--$15,824,000 class A-3 'AAAsf'; Outlook Stable;
--$94,344,000 class A-SB 'AAAsf'; Outlook Stable;
--$190,000,000 class A-4 'AAAsf'; Outlook Stable;
--$283,135,000 class A-5 'AAAsf'; Outlook Stable;
--$911,443,000a class X-A 'AAAsf'; Outlook Stable;
--$89,530,000b class A-M 'AAAsf'; Outlook Stable;
--$55,773,000b class B 'AA-sf'; Outlook Stable;
--$198,140,000b class PEZ 'A-sf'; Outlook Stable;
--$52,837,000b class C 'A-sf'; Outlook Stable;
--$108,610,000a,c class X-B 'A-sf'; Outlook Stable;
--$64,579,000c class D 'BBB-sf'; Outlook Stable;
--$23,483,000c class E 'BBsf'; Outlook Stable.
(a) Notional amount and interest-only.
(b) 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.
(c) Privately placed and pursuant to Rule 144A.
The expected ratings are based on information provided by the issuer as of Aug. 4, 2014. Fitch does not expect to rate the $36,693,000 interest-only class X-C, the $52,837,569 interest-only class X-D, the $13,210,000 class F, the $13,209,000 class G or the $39,628,569 class H certificates.
The certificates represent the beneficial ownership interest in the trust, primary assets of which are 69 loans secured by 85 commercial properties having an aggregate principal balance of approximately $1.17 billion, as of the cutoff date. The loans were contributed to the trust by Cantor Commercial Real Estate Lending, L.P., German American Capital Corporation, Ladder Capital Finance LLC, and Natixis Real Estate Capital LLC.
Fitch reviewed a comprehensive sample of the transaction's collateral, including site inspections on 76.9% of the properties by balance, cash flow analysis of 84.8%, and asset summary reviews on 91.2% of the pool.
KEY RATING DRIVERS
High Fitch Leverage: This transaction has higher leverage than other recent Fitch-rated fixed-rate deals. The pool's Fitch debt service coverage ratio (DSCR) and loan to value (LTV) of 1.16x and 107.7%, respectively, are worse than the first-half 2014 averages of 1.19x and 105.6%.
Pool Concentration: The pool is diverse by loan size and sponsor as compared to average transactions from 2013 and first-half 2014, as evidenced by a loan concentration index (LCI) of 277 and sponsor concentration index (SCI) of 298. Also, the 10 largest loan exposures represent 42.4% of the total pool balance, which is lower than the average 2013 and first-half 2014 top-10 concentration of 54.5% and 52.5%, respectively.
High Hotel Concentration: Hotel properties make up 20.8% of the pool, which is greater than the 2013 and first-half 2014 averages of 14.7% and 13.3%, respectively. Hotels have the highest probability of default in Fitch's multiborrower model.
Above-Average Property Quality: Fitch assigned property quality grades of 'A-' or better to 10.6% of the pool by balance (13.8% of properties inspected by Fitch), including two of the five largest loans in the pool. Furthermore, property quality grades of 'B+' or better were assigned to 35.4% of the balance of properties inspected by Fitch.
For this transaction, Fitch's net cash flow (NCF) was 20.1% below the most recent net operating income (NOI; for properties for which a recent NOI was provided, excluding properties that were stabilizing during this period). Unanticipated further declines in property-level NCF could result in higher defaults and loss severities on defaulted loans, and could result in potential rating actions on the certificates. Fitch evaluated the sensitivity of the ratings assigned to COMM 2014-CCRE19 certificates and found that the transaction displays slightly above 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 'BBB+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 83 - 84.
The master servicer will be Midland Loan Services, a Division of PNC Bank, National Association, rated 'CMS1' by Fitch. The special servicer will be Midland Loan Services, a Division of PNC Bank, National Association, rated 'CSS1'.
Additional Information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Criteria for Analyzing Multiborrower U.S. Commercial Mortgage Transactions' (Aug. 7, 2013);
--'Global Structured Finance Rating Criteria' (May 20, 2014);
--'Rating Criteria for U.S. Commercial Mortgage Servicers' (Feb. 14, 2014);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 11, 2013);
--'Counterparty Criteria for Structured Finance and Covered Bonds' (May 14, 2014).
Applicable Criteria and Related Research: COMM 2014-CCRE19 Mortgage Trust (US CMBS)
Counterparty Criteria for Structured Finance and Covered Bonds
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
Rating Criteria for U.S. Commercial Mortgage Servicers
Global Structured Finance Rating Criteria
Criteria for Analyzing Multiborrower U.S. Commercial Mortgage Transactions