CHICAGO--(BUSINESS WIRE)--Fitch Ratings has issued its presale report on Citigroup Commercial Mortgage Trust 2014-GC25 Commercial Mortgage Pass-Through Certificates.
Fitch expects to rate the transaction and assign Rating Outlooks as follows:
--$30,646,000 class A-1 'AAAsf'; Outlook Stable;
--$9,763,000 class A-2 'AAAsf'; Outlook Stable;
--$235,000,000 class A-3 'AAAsf'; Outlook Stable;
--$248,803,000 class A-4 'AAAsf'; Outlook Stable;
--$65,202,000 class A-AB 'AAAsf'; Outlook Stable;
--$634,673,000* class X-A 'AAAsf'; Outlook Stable;
--$52,626,000* class X-B 'AA-sf'; Outlook Stable;
--$45,259,000b class A-S 'AAAsf'; Outlook Stable;
--$52,626,000b class B 'AA-sf'; Outlook Stable;
--$137,881,000b class PEZ 'A-sf'; Outlook Stable;
--$39,996,000b class C 'A-sf'; Outlook Stable.
(*) Notional amount and interest-only.
(a) Privately placed pursuant to Rule 144A.
(b) The class A-S, class B and class C certificates may be exchanged for class PEZ certificates, and class PEZ certificates may be exchanged for the class A-S, class B and class C certificates.
The expected ratings are based on information provided by the issuer as of Oct. 6, 2014. Fitch does not expect to rate the $49,469,000*a class X-D, the $16,840,000*a class X-E, the $17,893,000*a class X-F, the $30,524,109*a class X-G, the $49,469,000a class D, the $16,840,000a class E, the $17,893,000a class F, and the $30,524,109a class G certificates.
The certificates represent the beneficial ownership in the trust, primary assets of which are 62 loans secured by 99 commercial properties having an aggregate principal balance of approximately $842 million as of the cutoff date. The loans were contributed to the trust by Citigroup Global Markets Realty Corp.; MC-Five Mile Commercial Mortgage Finance LLC; Starwood Mortgage Funding I LLC; Goldman Sachs Mortgage Company; RAIT Funding, LLC; GS Commercial Real Estate LP; and SPT CA Fundings, LLC.
Fitch reviewed a comprehensive sample of the transaction's collateral, including site inspections on 71.8% of the properties by balance, cash flow analysis of 85%, and asset summary reviews of 86.7% of the pool.
KEY RATING DRIVERS
High Fitch Leverage: The transaction has higher leverage than other recent Fitch-rated fixed-rate multiborrower deals. The pool's Fitch debt service coverage ratio (DSCR) and loan to value (LTV) of 1.13x and 110.6%, respectively, are worse than the 2013 and first-half 2014 averages of 1.29x and 101.6% and 1.19x and 105.6%, respectively.
Pool Concentration: The 10 largest loans represent 59.7% of the total pool balance, and the top three loans represent 27.6% of the total pool balance. The LCI for the pool is 485 and the SCI is 508 - both are higher than recent comparable transactions.
Traditional Property Types: The three largest property types are office (35.6% of pool), retail (26.3%), and multifamily (16.2%). Hospitality represents only 2.7% of the pool, a low concentration for the most volatile property type. For Fitch-rated deals in the first half 2014, office, retail, multifamily, and hotels represented 18.4%, 31.4%, 17.2%, and 13.3%, respectively.
Collateral Quality: As a percent of Fitch inspected properties, 49.5% of the pool received a property quality grade of 'B+' or higher, while only 5.1% received a grade below 'B-.' The largest loan in the pool, Bank of America Plaza, received a property quality grade of 'A.'
For this transaction, Fitch's net cash flow (NCF) was 8.5% 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 CGCMT 2014-GC25 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 '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 76 -77.
The master servicer will be Wells Fargo Bank, National Association, rated 'CMS1-' by Fitch. The special servicer will be Midland Loan Services, a Division of PNC Bank, National Association, rated 'CSS1' 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 (June 2014);
--Global Structured Finance Rating Criteria (August 2014);
--Rating Criteria for U.S. Commercial Mortgage Servicers (February 2014);
--U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (December 2013).
Applicable Criteria and Related Research: Citigroup Commercial Mortgage Trust 2014-GC25 (US CMBS)
Criteria for Analyzing Multiborrower U.S. Commercial Mortgage Transactions
Global Structured Finance Rating Criteria
Rating Criteria for U.S. Commercial Mortgage Servicers
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria