CHICAGO--(BUSINESS WIRE)--Fitch Ratings has assigned the following ratings and Rating Outlooks to Deutsche Bank Securities, Inc.'s COMM 2014-CCRE21 Commercial Mortgage Trust Pass-Through Certificates:
--$30,000,000 class A-1 'AAAsf'; Outlook Stable;
--$91,176,000 class A-2 'AAAsf'; Outlook Stable;
--$49,250,000 class A-SB 'AAAsf'; Outlook Stable;
--$406,965,000 class A-3 'AAAsf'; Outlook Stable;
--$629,974,000a class X-A 'AAAsf'; Outlook Stable;
--$52,583,000b class A-M 'AAAsf'; Outlook Stable;
--$46,398,000b class B 'AA-sf'; Outlook Stable;
--$136,099,000b class PEZ 'A-sf'; Outlook Stable;
--$37,118,000b class C 'A-sf'; Outlook Stable;
--$83,516,000ac class X-B 'A-sf'; Outlook Stable;
--$40,211,000ac class X-C 'BBB-sf'; Outlook Stable;
--$40,211,000c class D 'BBB-sf'; Outlook Stable;
--$8,248,000c class E 'BB+sf'; 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.
Fitch does not expect to rate the $27,839,000 interest-only class X-D, the $18,559,000 interest-only class X-E, the $24,745,357 interest-only class X-F, the $19,591,000 class F, the $10,310,000 class G, the $8,249,000 class H, or the $24,745,357 class J certificates.
The class A-3 balance increased to $406,965,000 from $185,000,000 since Fitch published its presale report. Additionally, the class A-4 was withdrawn because it was removed from the transaction structure.
The certificates represent the beneficial ownership interest in the trust, primary assets of which are 59 loans secured by 79 commercial properties having an aggregate principal balance of approximately $824.8 million, as of the cutoff date. The loans were contributed to the trust by German American Capital Corporation, Cantor Commercial Real Estate Lending, L.P., KeyBank National Association, Natixis Real Estate Capital LLC, UBS Real Estate Securities, Inc., and Pillar Funding LLC.
Fitch reviewed a comprehensive sample of the transaction's collateral, including site inspections on 58.2% of the properties by balance, cash flow analysis of 82.9%, and asset summary reviews on 82.9% 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) of 1.17x is slightly below the first-half 2014 average of 1.19x. The pool's Fitch loan to value (LTV) of 111.0% exceeds the first-half 2014 average of 105.6%.
Limited Amortization: The pool is scheduled to amortize by only 9.8% of the initial pool balance prior to maturity. Ten loans (32.7%), including four of the top 10 loans, are full-term interest only (IO), and 21 loans (34.6%) are partial IO. Fitch-rated transactions in the first half of 2014 had an average full-term IO percentage of 18.3% and a partial IO percentage of 37.8%.
High Hotel and Multifamily Concentration: Hotel properties comprise 19.8% of the pool, which is greater than the 2013 and first-half 2014 averages of 14.7% and 13.3%, respectively. Multifamily properties comprise of 25.6% of the pool, which is greater than the 2013 and first-half 2014 averages of 17.2% and 12.1%, respectively. Hotels have the highest probability of default in Fitch's multiborrower model, whereas multifamily properties have the lowest probability of default in Fitch's multiborrower model.
For this transaction, Fitch's net cash flow (NCF) was 17.2% 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-CCRE21 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 '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 'BBBsf' could result. The presale report includes a detailed explanation of additional stresses and sensitivities on pages 68 - 69.
The master servicer will be Midland Loan Services, a Division of PNC Bank, National Association, rated 'CMS1' by Fitch. The special servicer will be LNR Partners, LLC, rated 'CSS1-'.
Additional Information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Criteria for Analyzing Multiborrower U.S. Commercial Mortgage Transactions' (June 18, 2014);
--'Global Structured Finance Rating Criteria' (Aug. 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. 10, 2014);
--'Counterparty Criteria for Structured Finance and Covered Bonds' (May 14, 2014);
Applicable Criteria and Related Research:
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
Counterparty Criteria for Structured Finance and Covered Bonds