Approximately $1.24 Billion of Structured Securities Affected
New York, April 27, 2018 -- Moody's Investors Service, ("Moody's") has
affirmed the ratings on ten classes and downgraded the ratings on two
classes in COMM 2014-CCRE14 Mortgage Trust, Commercial Mortgage
Pass-Through Certificates, Series 2014-CCRE14:
Cl. A-2, Affirmed Aaa (sf); previously on Apr
21, 2017 Affirmed Aaa (sf)
Cl. A-SB, Affirmed Aaa (sf); previously on Apr
21, 2017 Affirmed Aaa (sf)
Cl. A-3, Affirmed Aaa (sf); previously on Apr
21, 2017 Affirmed Aaa (sf)
Cl. A-4, Affirmed Aaa (sf); previously on Apr
21, 2017 Affirmed Aaa (sf)
Cl. A-M, Affirmed Aaa (sf); previously on Apr
21, 2017 Affirmed Aaa (sf)
Cl. B, Affirmed Aa3 (sf); previously on Apr 21,
2017 Affirmed Aa3 (sf)
Cl. C, Affirmed A3 (sf); previously on Apr 21,
2017 Affirmed A3 (sf)
Cl. D, Affirmed Baa3 (sf); previously on Apr 21,
2017 Affirmed Baa3 (sf)
Cl. E, Downgraded to B1 (sf); previously on Apr 21,
2017 Affirmed Ba3 (sf)
Cl. F, Downgraded to Caa1 (sf); previously on Apr 21,
2017 Affirmed B2 (sf)
Cl. X-A, Affirmed Aaa (sf); previously on Apr
21, 2017 Affirmed Aaa (sf)
Cl. PEZ, Affirmed A1 (sf); previously on Apr 21,
2017 Affirmed A1 (sf)
RATINGS RATIONALE
The ratings on eight P&I classes were affirmed because the transaction's
key metrics, including Moody's loan-to-value (LTV)
ratio, Moody's stressed debt service coverage ratio (DSCR) and the
transaction's Herfindahl Index (Herf), are within acceptable
ranges.
The rating on Cl. E and Cl. F were downgraded due to anticipated
losses from specially serviced loans.
The rating on the IO class, Cl. X-A, was affirmed
based on the credit quality of its referenced classes.
The rating on the exchangeable class, Cl. PEZ, was
affirmed due to the weighted average rating factor (WARF) of the exchangeable
classes.
Moody's rating action reflects a base expected loss of 4.5%
of the current pooled balance, compared to 3.9% at
Moody's last review. Moody's base expected loss plus realized
losses is now 4.2% of the original pooled balance,
compared to 3.8% at the last review. Moody's
provides a current list of base expected losses for conduit and fusion
CMBS transactions on moodys.com at http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF215255.
FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS:
The performance expectations for a given variable indicate Moody's forward-looking
view of the likely range of performance over the medium term. Performance
that falls outside the given range can indicate that the collateral's
credit quality is stronger or weaker than Moody's had previously expected.
Factors that could lead to an upgrade of the ratings include a significant
amount of loan paydowns or amortization, an increase in the pool's
share of defeasance or an improvement in pool performance.
Factors that could lead to a downgrade of the ratings include a decline
in the performance of the pool, loan concentration, an increase
in realized and expected losses from specially serviced and troubled loans
or interest shortfalls.
METHODOLOGY UNDERLYING THE RATING ACTION
The methodologies used in rating COMM 2014-CCRE14 Mortgage Trust,
Cl. A-2, Cl. A-SB, Cl.
A-3, Cl. A-4, Cl. A-M,
Cl. B, Cl. C, Cl. D, Cl.
E, and Cl. F were "Approach to Rating US and Canadian Conduit/Fusion
CMBS" published in July 2017 and "Moody's Approach to Rating
Large Loan and Single Asset/Single Borrower CMBS" published in July
2017. The principal methodology used in rating COMM 2014-CCRE14
Mortgage Trust, Cl. PEZ was "Moody's Approach
to Rating Repackaged Securities" published in June 2015.
The methodologies used in rating COMM 2014-CCRE14 Mortgage Trust,
Cl. X-A were "Approach to Rating US and Canadian Conduit/Fusion
CMBS" published in July 2017, "Moody's Approach to Rating
Large Loan and Single Asset/Single Borrower CMBS" published in July
2017, and "Moody's Approach to Rating Structured Finance
Interest-Only (IO) Securities" published in June 2017.
Please see the Rating Methodologies page on www.moodys.com
for a copy of these methodologies.
DEAL PERFORMANCE
As of the April 12, 2018 distribution date, the transaction's
aggregate certificate balance has decreased by 6.5% to $1.29
billion from $1.38 billion at securitization. The
certificates are collateralized by 57 mortgage loans ranging in size from
less than 1% to 12% of the pool, with the top ten
loans (excluding defeasance) constituting 57% of the pool.
Three loans, constituting 28.0% of the pool,
have investment-grade structured credit assessments. Six
loans, constituting 4.7% of the pool, have defeased
and are secured by US government securities.
Moody's uses a variation of Herf to measure the diversity of loan
sizes, where a higher number represents greater diversity.
Loan concentration has an important bearing on potential rating volatility,
including the risk of multiple notch downgrades under adverse circumstances.
The credit neutral Herf score is 40. The pool has a Herf of 18,
compared to 19 at Moody's last review.
Five loans, constituting 5.6% of the pool, are
on the master servicer's watchlist. The watchlist includes
loans that meet certain portfolio review guidelines established as part
of the CRE Finance Council (CREFC) monthly reporting package. As
part of Moody's ongoing monitoring of a transaction, the agency
reviews the watchlist to assess which loans have material issues that
could affect performance.
Six loans, constituting 6.9% of the pool, are
currently in special servicing. The largest specially serviced
loan is 175 West Jackson ($39.2 million -- 3.0%
of the pool), which represents a pari-passu portion of a
$274.4 million first mortgage loan. The loan is secured
by a Class A, 22-story office building totaling 1.45
million square feet (SF) and located within the CBD of Chicago,
Illinois. The loan transferred to special servicing in March 2018
for imminent default, in connection with the borrowers request to
modify the loan. The modification request included a loan assumption.
As of March 2018, the property was 71% leased, compared
to 84% in November 2016 and 92% at securitization.
This loan was included in the conduit component and Moody's LTV and stressed
DSCR are 114.3% and 0.85X, respectively.
The second largest specially serviced loan is McKinley Mall ($26.1
million -- 2.0% of the pool), which represents
a pari-passu portion of a $35.5 million first mortgage
loan. The loan recently transferred to special servicing in April
2018. The property lost anchor tenant Macy's in 2017.
Current anchors include: Sears, JC Penney, and The Bon-Ton
Store, however, Bon-Ton has recently announced the
closure of its store as part of its liquidation. The property's
revenue has declined year over year and the net operating income (NOI)
is below that of securitization.
The remaining four specially serviced loans are secured by multifamily
properties in North Dakota. Moody's estimates an aggregate $35.2
million loss for the specially serviced loans.
Moody's received full or partial year 2017 operating results for 96%
of the pool, and full year 2016 operating results for 94%
of the pool (excluding specially serviced and defeased loans).
Moody's weighted average conduit LTV is 106%, compared
to 108% at Moody's last review. Moody's conduit
component excludes loans with structured credit assessments, defeased
and CTL loans, and specially serviced loans (except for the 175
West Jackson Loan). Moody's net cash flow (NCF) reflects
a weighted average haircut of 17% to the most recently available
net operating income (NOI). Moody's value reflects a weighted
average capitalization rate of 9.0%.
Moody's actual and stressed conduit DSCRs are 1.35X and 1.00X,
respectively, compared to 1.34X and 0.98X at the last
review. Moody's actual DSCR is based on Moody's NCF
and the loan's actual debt service. Moody's stressed
DSCR is based on Moody's NCF and a 9.25% stress rate
the agency applied to the loan balance.
The largest loan with a structured credit assessment is the 60 Hudson
Street Loan ($155.0 million -- 12.0%
of the pool), which represents a pari-passu portion of a
$280.0 million mortgage loan. The loan is secured
by a 24-story, mission critical telecommunications and data
center building located in the Tribeca neighborhood of New York City.
The property is widely regarded as one of the world's most connected telecommunications
and data center buildings. As of February 2018, the property
was 76% leased, unchanged from February 2017 and August 2016.
Moody's structured credit assessment and stressed DSCR are aaa (sca.pd)
and 1.81X, respectively.
The second largest loan with a structured credit assessment is the 625
Madison Avenue loan ($110.0 million, 8.5%
of the pool), which represents a pari-passu portion of a
$195 million first mortgage loan. The loan is secured by
the fee interest in a 0.81-acre parcel of land located at
625 Madison Avenue between East 58th and East 59th Street in New York
City. The fee interest is subject to a ground lease pursuant to
which the ground tenant constructed, developed and owns the improvements
that sit on top of the ground. The improvements consist of a 17-story,
mixed-use building, and the ground tenant's interest in the
improvements is not collateral for the 625 Madison Avenue loan.
The collateral is also encumbered with $195 million of mezzanine
debt. Moody's structured credit assessment is aa2 (sca.pd).
The third loan with a structured credit assessment is the Saint Louis
Galleria loan ($95.0 million, 7.4% of
the pool), which represents a portion a $215 million mortgage
loan. The loan is componentized in to three notes: (i) Note
A-1, having a par balance of $100 million; (ii)
Note A-2, having a par balance of $95 million;
and (iii) Note A-1B, having a par balance of $20 million.
Note A-1 sits pari passu to Note A-2 and Note A-1B
sits subordinate to both Note A-1 and Note A-2. Only
Note A-2 has been contributed to the this transaction. The
loan is secured by a 467,440 square foot (SF) component of a 1.18
million SF, Class A, super-regional mall located in
St. Louis, Missouri. The mall is anchored by Dillard's,
Macy's and Nordstrom, none of which are part of the loan collateral.
The property, including non-collateral tenants, was
98% leased as of December 2016 while inline space was 94%
leased. As of December 2017, comparable inline sales (<10,000
SF) were $650 per square foot (PSF), compared to $685
PSF in the prior year. Property performance continued to improve
in 2016, as revenue outpaced expense growth. Moody's structured
credit assessment and stressed DSCR are a1 (sca.pd) and 1.29X,
respectively.
The top three conduit loans represent 19.0% of the pool
balance. The largest loan is the Google and Amazon Office Portfolio
Loan ($154.5 million -- 12.0% of the
pool), which represents a pari-passu portion of a $450.7
million mortgage. The loan is also encumbered by $67.8
million of mezzanine debt. The loan is secured by an office portfolio
located in Sunnyvale, California. The Moffett Towers Building
D (Amazon Building) is a newly constructed eight-story, Class
A office building containing 357,481 square feet (SF). It
is part of a seven-building campus. A2Z Development,
a wholly owned subsidiary of Amazon, will use the space for design
and product development for the Kindle e-reader. The Google
Campus is comprised of four, four-story, Class A office
buildings totaling 700,328 square feet (SF), which is part
of a six-building office campus known as Technology Corners.
Moody's LTV and stressed DSCR are 111.6% and 0.91X,
respectively, compared to 111.9% and 0.91X
at the last review.
The second largest loan is the Highland Hills Apartment Loan ($51.4
million -- 4.0% of the pool), which is secured
by a 826-unit student housing property located in Mankato,
Minnesota. The property was constructed in three separate phases
between 1963 and 2011, consisting of Class B/C quality. The
property is located directly across from Minnesota State University.
As of September 2017, the property was 83% leased,
compared to 76% in December 2016, 85% in December
2015 and 99% at securitization. Enrollment at the university
has declined approximately 4% since securitization. Property
performance has declined as occupancy struggles continue. Moody's
LTV and stressed DSCR are 108% and 0.90X, respectively,
compared to 99% and 0.98X at Moody's last review.
The third largest loan is the Dallas FBI Loan ($38.9 million
-- 3.0% of the pool), which is secured by a five
story, class A, 226,175 SF office building located on
15 acres of land in Dallas, Texas. The property was a built-to-suit
for the FBI in 2002, and serves as the Dallas field office in northeast
Texas. The FBI, the properties sole tenant, spent approximately
$3.8 million during construction for build-out features.
The tenant's lease expiration in October 2022, approximately 14
months prior to loan maturity date in December 2023. Moody's LTV
and stressed DSCR are 118% and 0.92X, respectively.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and sensitivity
analysis, see the sections Methodology Assumptions and Sensitivity
to Assumptions of the disclosure form.
The analysis includes an assessment of collateral characteristics and
performance to determine the expected collateral loss or a range of expected
collateral losses or cash flows to the rated instruments. As a
second step, Moody's estimates expected collateral losses or cash
flows using a quantitative tool that takes into account credit enhancement,
loss allocation and other structural features, to derive the expected
loss for each rated instrument.
Moody's did not use any stress scenario simulations in its analysis.
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the credit rating action on the support provider and in relation to
each particular credit rating action for securities that derive their
credit ratings from the support provider's credit rating.
For provisional ratings, this announcement provides certain regulatory
disclosures in relation to the provisional rating assigned, and
in relation to a definitive rating that may be assigned subsequent to
the final issuance of the debt, in each case where the transaction
structure and terms have not changed prior to the assignment of the definitive
rating in a manner that would have affected the rating. For further
information please see the ratings tab on the issuer/entity page for the
respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Paul Cognetti
AVP-Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Matthew Halpern
Vice President - Senior Analyst
Structured Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
