DBRS, Inc. (DBRS Morningstar) has confirmed all ratings of the Commerical Mortgage Pass-Through Certificates issued by COMM 2014-CCRE21 as follow.
Class A-3 at AAA (sf)
Class A-SB at AAA (sf)
Class A-M at AAA (sf)
Class X-A at AAA (sf)
Class B at AA (high) (sf)
Class X-B at A (high) (sf)
Class C at A (sf)
Class PEZ at A (sf)
Class X-C at BB (low) (sf)
Class D at B (high) (sf)
Class E at B (low) (sf)
Class F at C (sf)
Class G at C (sf)
All trends are Stable, with the exception of Class F and Class G, which are assigned ratings which do not typically carry trends in Commercial Mortgage Backed Securities (CMBS).
DBRS Morningstar's expectations for the pool remain in line with the last rating action in November 2022. Since then, one real-estate-owned (REO) asset was disposed from the pool with a slightly better recovery than DBRS Morningstar previously anticipated. The unrated Class J bond has been reduced by approximately 76.2% to $14.1 million. Three loans have defeased, bringing the total pool defeasance to 16 loans, representing 32.3% of the total trust balance.
All of the outstanding loans are scheduled to mature by December 2024. Fifty loans/assets remain of the original 59. The pool has paid down 26.7%, to $604.6 million from $824.8 million since issuance. The weighted-average debt-service-coverage-ratio (DSCR) and debt yield for the pool are reported to be 2.00x and 11.5%, respectively. Given these metrics, it appears that the majority of loans in the pool are well-positioned to repay at or ahead of scheduled maturity.
Three loans remain in special servicing, representing 13.3% of the pool, all of which were in special servicing at the time of the last rating action. The largest of these is Kings' Shops (Prospectus ID#3, 7.9% of the pool), which is secured by a 69,023-square-foot (sf) retail property in Waikoloa, Hawaii. Kings' Shops is an upscale center located within walking distance of the Waikoloa Beach Marriott Resort & Spa and the Hilton Waikoloa Village. The loan transferred to special servicing in September 2020 for payment default and the property is now REO. The property was previously anchored by Macy's, which has since closed; the last reported occupancy was 78% as of June 2020, down from 91% at year-end 2019 and 94% at issuance.
A May 2022 appraisal valued the property at $47.5 million, up slightly from a previous appraisal of $45.8 million in August 2021, but well below the issuance appraised value of $84.0 million. DBRS Morningstar views the uptick in appraised value as evidence that the outlook for economies with reliance on tourism is improving, as mitigation efforts related to the pandemic ease and leisure travelers return. Given the loan's exposure relative to the expected value, DBRS Morningstar does not expect the loan amount to be fully recovered at disposition.
The second largest loan in special servicing is Marine Club Apartments (Prospectus ID#9; 3.8% of the pool). The loan is secured by a fractured condominium community, with 204 of the total 301 units serving as collateral, and the remaining 97 units owned by individual owners. The loan was transferred to special servicing in October 2020 for payment default. In April 2022, the borrower made two settlement offers, both of which were rejected by the special servicer. The preferred equity holder has since initiated a process to replace the manager of the borrower, and the special servicer continues to dual track foreclosure while discussing workout alternatives. While the June 2022 appraised value of $37.8 million is greater than the outstanding loan amount, DBRS Morningstar notes increasing exposure as the loan remains delinquent. Outstanding advances as of the January 2023 remittance total approximately $4.5 million.
The smallest loan in special servicing is Manhattan Place (Prospectus ID#20; 1.6% of the pool), which is secured by a 137,315-sf community retail center in Harvey, Louisiana. The loan was transferred to special servicing in January 2020 for default after the borrower failed to pay off the loan at the November 2019 maturity. While the foreclosure sale was originally scheduled to occur in January 2022, the borrower filed for bankruptcy, delaying proceedings. A December 2022 appraisal valued the property at $15.0 million, down from a September 2021 appraised value of $16.9 million, and $19.0 million at issuance.
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/396929/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings> (May 17, 2022).
DBRS Morningstar did not perform an updated model run given the lack of meaningful changes in performance since the last rating action. As of the previous actions published on November 4, 2022, material deviations from the North American CMBS Insight Model were reported for Classes D and E, as the quantitative results suggested higher ratings. The material deviations were warranted given the uncertain loan-level event risk with the loans in special servicing and on the servicer's watchlist.
Classes X-A, X-B, and X-C are interest-only (IO) certificates that reference a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated applicable reference obligation tranche adjusted upward by one notch if senior in the waterfall.
All ratings are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by DBRS Morningstar.
Notes:
All figures are in U.S. dollars unless otherwise noted.
The principal methodology is North American CMBS Surveillance Methodology (October 3, 2022), which can be found on dbrsmorningstar.com under Methodologies & Criteria. For a list of the structured-finance-related methodologies that may be used during the rating process, please see the DBRS Morningstar Global Structured Finance Related Methodologies document, which can be found on dbrsmorningstar.com in the Commentary tab under Regulatory Affairs. Please note that not every related methodology listed under a principal structured finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.
The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482>.
The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.
Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The DBRS Morningstar long-term rating scale definition indicates that ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.
For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com' >info@dbrsmorningstar.com.
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