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 the stable performance of the underlying collateral pool. As of the December 2015 remittance, the pool has had no delinquent or specially serviced loans since issuance. Six loans are on the servicer watchlist (4.0%). Four of the properties are encountering deferred maintenance issues that are anticipated to be resolved and represent minimal operating risk. Fitch has designated two watchlist loans (0.97%) as Fitch loans of concern due to decline in occupancy since issuance and economic weakness in their respective submarkets.
The pool's aggregate principal balance has been paid down by approximately 1.6% since issuance. Fifty-five (93.2% of the pool) of the 59 pool loans reported full year 2014 financials or rolling 12-month financials. Based on full year financial statements, the pool's overall net operating income (NOI) improved 3.7% since issuance.
The largest Fitch Loan of Concern (0.61%) is secured by Tioga Apartments, a 84-unit multifamily community located in Tioga, ND, 192 miles northeast of the Bismarck, ND. Occupancy at year-end 2014 was 100% and the debt service coverage ratio was 2.34x. As of third quarter 2015, the property's occupancy had fallen to 74% and property's debt service coverage ratio (DSCR) was 1.64x. The decline in performance is driven by personnel reductions from oil production cutbacks in the Bakken Shale region. The property could experience further volatility as a major oil company reduced its contracted corporate units from 24 to 12 and the industry experiences continued weakness into 2016. The sponsor indicated that leasing will not rebound until oil prices stabilize at a higher price and the local economy experiences a resurgence in petroleum jobs. Fitch will continue to monitor the loan as the sponsor updates the servicer on the leasing activity during the first half of the year.
The second Fitch Loan of Concern (0.36%) is secured by Morehead Estates, a 110-unit multifamily community located in Morehead, KY, two miles northeast of Morehead State University. Occupancy at year-end 2014 was 95% and the DSCR was 0.94x. As of third quarter 2015, the property's occupancy was 96% and property's DSCR was 1.12x. The sponsor indicated that the improvement was attributable to the higher in-place rents of new tenants. The property could experience near-term volatility as the subject targets the Morehead State University's student body.
The largest loan in the pool (11.4%) is a pari passu A-note secured by a 1.1 million square foot (sf) 24-story telecommunications building located in the TriBeCa neighborhood of New York City. The property, which was built in 1930 and renovated in 2013, is leased to a variety of national telecommunications firms. As of the June 2015 rent roll, the property was 78.9% occupied compared with 77.3%, as of August 2014, and 74.8% at issuance. The servicer reported year-end 2014 net operating income (NOI) DSCR was 4.87x.
The Rating Outlook for all classes remains Stable. Due to the recent issuance of the transaction and stable 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 has affirmed the following classes as indicated:
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.
Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S.
Re-REMIC Criteria (pub. 13 Nov 2015)
COMM 2014-CCRE14 Mortgage Trust -- Appendix
Dodd-Frank Rating Information Disclosure Form