Approximately $743 million of structured securities affected
New York, August 24, 2021 -- Moody's Investors Service ("Moody's") has affirmed
the ratings on five classes in COMM 2014-CCRE20 Mortgage Trust,
Commercial Mortgage Pass-Through Certificates as follows:
Cl. A-3, Affirmed Aaa (sf); previously on Jun
2, 2020 Affirmed Aaa (sf)
Cl. A-4, Affirmed Aaa (sf); previously on Jun
2, 2020 Affirmed Aaa (sf)
Cl. A-SB, Affirmed Aaa (sf); previously on Jun
2, 2020 Affirmed Aaa (sf)
Cl. A-M, Affirmed Aa1 (sf); previously on Jun
2, 2020 Affirmed Aa1 (sf)
Cl. B, Affirmed Aa3 (sf); previously on Jun 2,
2020 Affirmed Aa3 (sf)
RATINGS RATIONALE
The ratings on the five principal and interest (P&I) classes were
affirmed due to their credit support and 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.
Moody's rating action reflects a base expected loss of 9.2%
of the current pooled balance, compared to 7.6% at
Moody's last review. Moody's base expected loss plus realized losses
is now 8.7% of the original pooled balance, compared
to 6.6% 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 these ratings were "Moody's Approach to Rating
Large Loan and Single Asset/Single Borrower CMBS" published in September
2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1190579,
and "Approach to Rating US and Canadian Conduit/Fusion CMBS" published
in September 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1244778.
Alternatively, please see the Rating Methodologies page on www.moodys.com
for a copy of these methodologies.
Please note that a Request for Comment was published in which Moody's
requested market feedback on potential revisions to one or more of the
methodologies used in determining these Credit Ratings. If the
revised methodologies are implemented as proposed, the Credit Ratings
referenced in this press release might be positively affected.
Request for Comments can be found on the rating methodologies page on
www.moodys.com.
DEAL PERFORMANCE
As of the August 12, 2021 distribution date, the transaction's
aggregate certificate balance has decreased by 19% to $962
million from $1.18 billion at securitization. The
certificates are collateralized by 54 mortgage loans ranging in size from
less than 1% to 13% of the pool, with the top ten
loans constituting 54% of the pool. Thirteen loans,
constituting 18% 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 15,
compared to 17 at last review.
As of the August 2021 remittance report, loans representing 87.2%
were current, 0.7% were beyond their grace period
but less than 30 days delinquent, 1.1% were classified
as 30 days delinquent, and 11.0% were over 90 days
delinquent or in foreclosure.
Thirteen loans, constituting 25% 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.
Two loans have been liquidated from the pool, contributing to an
aggregate realized loss of $14.8 million (for a loss severity
of 68%).
Five loans, constituting 17% of the pool, are currently
in special servicing. Four of the specially serviced loans,
14.5% of the pool, have transferred to special servicing
since May 2020.
The largest specially serviced loan is the Harwood Center Loan ($56.1
million --5.8% of the pool), which represents
a pari-passu portion of a $84.1 million mortgage
loan. The loan is secured by the borrower's fee and leasehold
interests in a 36-story, Class A office tower and a contiguous
9-story parking garage located in the Arts District of the Dallas
central business district. The Property is situated on four parcels,
three of which operate subject to ground leases that are scheduled to
expire in 2077. At securitization, the largest tenant Omnicom
Group leased 46% of the net rentable area (NRA) with a lease expiration
in December 2019. However, following the lease extension
and contraction of Omnicom Group, the property's occupancy
rate dropped to 69% in March 2020 from 91% in December 2019.
The lower occupancy caused the DSCR to decline below 1.00X as of
March 2020 and the loan transferred to special servicing in May 2020 for
imminent monetary default. The special servicer is seeking to appoint
a receiver and is currently evaluating other remedies available under
the loan documents. As of the August 2021 remittance report,
the loan is last paid through its July 2020 payment date. A recent
appraisal valued the property below the outstanding loan balance and as
of the August 2021 remittance statement the master servicer has recognized
an appraisal reduction of 11% of the outstanding loan balance.
The second largest specially serviced loan is the Beverly Connection Loan
($43.8 million --4.5% of the
pool), which represents a pari-passu portion of a $175
million senior mortgage loan. The property is also encumbered with
a $35 million subordinate B-note and a $21 million
mezzanine debt. The loan is secured by an approximately 334,600
square feet (SF), two-level, power center located on
the border of Beverly Hills and West Hollywood in Los Angeles, California.
The collateral is comprised of a fee simple interest in approximately
270,700 SF of retail space and a leasehold interest in the remaining
portion with a ground lease expiration in December 2085. The largest
tenant, Target, accounts for 30% of NRA with a lease
expiration in 2029. Other national tenants at the property include
Marshalls (10% of NRA), Ross Dress for Less (9% of
NRA), Nordstrom Rack (9% of NRA), and Saks Fifth Avenue
Off Fifth (8% of NRA). The loan transferred to special servicing
in August 2020 due to delinquent payments. The loan is interest-only
through its term and is last paid through June 2020 as of the August 2021
remittance date. The loan is cash managed with all property cash
flow being controlled by the lender. Discussions remain ongoing
between the borrower, junior and mezzanine note holders and the
lenders. An updated appraisal from October 2020 valued the collateral
above the outstanding loan amount and no appraisal reductions has been
recognized on this loan.
The third largest specially serviced loan is the Crowne Plaza Houston
Katy Freeway Loan ($29.2 million --3.0%
of the pool), which is secured by a 207-guestroom,
full-service hotel located in Houston, Texas. Prior
to 2020, the property's net operating income (NOI) had already
declined significantly with the 2019 NOI declining approximately 58%
since 2017 as a result of decreased revenue. The property's performance
was further impacted by the pandemic and the loan transferred to special
servicing in May 2020 and became REO in June 2021. As of the August
2021 remittance report, the loan is last paid through its March
2020 payment date.
The remaining two specially serviced loans are secured by a full-service
hotel and a flex industrial office complex that transferred to special
servicing in April 2019 and January 2021, respectively. Moody's
estimates an aggregate $65.9 million loss for the specially
serviced loans (a 40% expected loss on average).
Moody's has also assumed a high default probability for two poorly performing
loans, each representing less than 1% of the pooled balance,
and has estimated an aggregate loss of $2.1 million (a 26%
expected loss on average) from these troubled loans.
The credit risk of loans is determined primarily by two factors:
1) Moody's assessment of the probability of default, which is largely
driven by each loan's DSCR, and 2) Moody's assessment of the severity
of loss upon a default, which is largely driven by each loan's loan-to-value
ratio, referred to as the Moody's LTV or MLTV. As described
in the CMBS methodology used to rate this transaction, we make various
adjustments to the MLTV. We adjust the MLTV for each loan using
a value that reflects capitalization (cap) rates that are between our
sustainable cap rates and market cap rates. We also use an adjusted
loan balance that reflects each loan's amortization profile.
The MLTV reported in this publication reflects the MLTV before the adjustments
described in the methodology.
Moody's received full or partial year 2020 operating results for 93%
of the pool, and partial year 2021 operating results for 84%
of the pool (excluding specially serviced and defeased loans).
Moody's weighted average conduit LTV is 107%, compared
to 109% at Moody's last review. Moody's conduit
component excludes loans with structured credit assessments, defeased
and CTL loans, and specially serviced and troubled loans.
Moody's net cash flow (NCF) reflects a weighted average haircut
of 26% to the most recently available NOI. Moody's
value reflects a weighted average capitalization rate of 9.8%.
Moody's actual and stressed conduit DSCRs are 1.67X and 1.03X,
respectively, compared to 1.65X and 0.99X 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 top three conduit loans represent 29.6% of the pool
balance. The largest loan is the Gateway Center Phase II Loan ($120.0
million -- 12.5% of the pool), which
represents a pari passu portion of a $300 million mortgage loan.
The loan is secured by a 602,000 SF retail center located in Brooklyn,
New York. The center is the second phase of a larger retail power
center. As of June 2021, the property was 100% leased,
the same as December 2019 and securitization. Retailers at the
property include JC Penney (which owns their improvements and leases the
land from the borrower), ShopRite, and Burlington Coat Factory.
The JC Penney location has not been included in any of the recent store
closure announcements. JC Penney represents 20% of the total
property's square footage but less than 5% of the base rental revenue.
The reported year-end 2020 NOI was $23.4 million,
compared to $26.3 million in 2019 and $23.5
million at securitization. The loan is interest-only throughout
the loan term and the 2020 NOI DSCR was 1.79X, compared to
2.02X at year-end 2019 and 1.81X at securitization.
Moody's LTV and stressed DSCR are 120% and 0.76X,
respectively, compared to 114% and 0.78X at Moody's
last review.
The second largest loan is the InterContinental Miami Loan ($115.0
million -- 12.0% of the pool), which
is secured by a 641-key, full-service hotel in downtown
Miami, Florida. The hotel was temporarily closed due to the
coronavirus pandemic and reopened in June 2020. Due to the commencement
of a Low Debt Service Period all excess funds have been deposited to the
Excess Cash Flow Account. While the hotel has seen ramp-up
of transient demand from customers looking for short getaways, the
property's main demand driver comes from commercial, meeting and
group business, which still lags in the recovery. For the
trailing twelve months ending March 2021 the property's cash flow
was insufficient to cover its operating expenses. The loan is interest-only
throughout the loan term and has remained current on its debt service
payments though the August 2021 remittance statement. Moody's LTV
and stressed DSCR are 111% and 1.04X, respectively,
compared to 100% and 1.16X at Moody's last review.
The third largest loan is the Culver City Creative Office Loan ($49.6
million -- 5.2% of the pool), is secured by the
borrower's fee simple interest in a creative office complex located
within the Hayden Tract of Culver City, which is part of Los Angeles,
California. The collateral encompasses 10 creative office buildings,
all of which have been converted from their former industrial uses in
the 1980s and 1990s. As of March 2021, the property was 95%
leased, compared to 99% leased as of December 2019.
The loan has amortized approximately 12% since securitization and
Moody's LTV and stressed DSCR are 109% and 0.92X,
respectively, compared to 112% and 0.89X at Moody's
last review.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and
sensitivity analysis, see the sections Methodology Assumptions and
Sensitivity to Assumptions in the disclosure form. Moody's
Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
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, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security 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.
The ratings have been disclosed to the rated entity or its designated
agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody's Policy
for Designating and Assigning Unsolicited Credit Ratings available on
its website www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288435.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the EU and is endorsed
by Moody's Deutschland GmbH, An der Welle 5, Frankfurt
am Main 60322, Germany, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that issued the credit rating is available on www.moodys.com.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the UK and is endorsed
by Moody's Investors Service Limited, One Canada Square,
Canary Wharf, London E14 5FA under the law applicable to credit
rating agencies in the UK. Further information on the UK endorsement
status and on the Moody's office that issued the credit rating is
available on www.moodys.com.
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.
Kevin Li
Asst Vice President - 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
VP - Senior Credit Officer
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
