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Rating Action:

Moody's affirms ten and downgrades two classes of WFRBS 2014-C24

14 Sep 2020

Approximately $950.4 million of structured securities affected

New York, September 14, 2020 -- Moody's Investors Service, ("Moody's") has affirmed the ratings on ten classes and downgraded ratings on two classes in WFRBS Commercial Mortgage Trust 2014-C24, Commercial Mortgage Pass-Through Certificates Series 2014-C24.

Cl. A-3, Affirmed Aaa (sf); previously on Sep 14, 2018 Affirmed Aaa (sf)

Cl. A-4, Affirmed Aaa (sf); previously on Sep 14, 2018 Affirmed Aaa (sf)

Cl. A-5, Affirmed Aaa (sf); previously on Sep 14, 2018 Affirmed Aaa (sf)

Cl. A-SB, Affirmed Aaa (sf); previously on Sep 14, 2018 Affirmed Aaa (sf)

Cl. A-S, Affirmed Aa1 (sf); previously on Sep 14, 2018 Affirmed Aa1 (sf)

Cl. B, Affirmed Aa3 (sf); previously on Sep 14, 2018 Affirmed Aa3 (sf)

Cl. C, Downgraded to Baa2 (sf); previously on Sep 14, 2018 Affirmed A3 (sf)

Cl. PEX**, Downgraded to A2 (sf); previously on Mar 18, 2019 Upgraded to Aa3 (sf)

Cl. SJ-A***, Affirmed Aa2 (sf); previously on Sep 14, 2018 Affirmed Aa2 (sf)

Cl. SJ-B***, Affirmed A2 (sf); previously on Sep 14, 2018 Affirmed A2 (sf)

Cl. SJ-C***, Affirmed Baa1 (sf); previously on Sep 14, 2018 Affirmed Baa1 (sf)

Cl. SJ-D***, Affirmed Ba2 (sf); previously on Sep 14, 2018 Affirmed Ba2 (sf)

** Reflects exchangeable classes

*** Reflects rake bond classes

RATINGS RATIONALE

The ratings on six pooled P&I classes, Cl. A-3 through Cl. B, 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 one pooled P&I class, Cl. C, was downgraded due to a decline in pool performance and higher anticipated losses from specially serviced and troubled loans. The largest specially serviced loan is secured by an office property in Houston that represents over 9% of the pool and is now real estate owned ("REO").

The ratings on four non-pooled rake classes, Cl. SJ-A, SJ-B, SJ-C and SJ-D, were affirmed based on the key metrics of their referenced loan, including Moody's loan to value (LTV) ratio. The rake classes are supported by the subordinate debt associated with the St. John's Town Center loan.

The rating on the exchangeable class, Cl. PEX, was downgraded due to decline in the credit quality of its referenced exchangeable classes.

The coronavirus outbreak, the government measures put in place to contain it, and the weak global economic outlook continue to disrupt economies and credit markets across sectors and regions. Our analysis has considered the effect on the performance of commercial real estate from the current weak US economic activity and a gradual recovery for the coming months. Although an economic recovery is underway, it is tenuous and its continuation will be closely tied to containment of the virus. As a result, the degree of uncertainty around our forecasts is unusually high. Stress on commercial real estate properties will be most directly stemming from declines in hotel occupancies (particularly related to conference or other group attendance) and declines in foot traffic and sales for non-essential items at retail properties. We regard the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety.

Moody's rating action reflects a base expected loss of 11.1% of the current pooled balance, compared to 6.5% at Moody's last review. Moody's base expected loss plus realized losses is now 9.9% of the original pooled balance, compared to 6.2% 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 principal methodology used in rating all classes except exchangeable classes and rake bond classes was "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in May 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1226187. The principal methodology used in rating exchangeable classes was "Moody's Approach to Rating Repackaged Securities" published in June 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1230078. The principal methodology used in rating rake bond classes was "Moody's Approach to Rating Large Loan and Single Asset/Single Borrower CMBS" published in May 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1227875. Please see the list of ratings at the top of this announcement to identify which classes are exchangeable classes (indicated by the **) and rating rake bond classes (indicated by the ***). Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

DEAL PERFORMANCE

As of the August 17, 2020 distribution date, the transaction's aggregate pooled certificate balance has decreased by 12.5% to $951.0 million from $1.088 billion at securitization. The certificates are collateralized by 73 mortgage loans ranging in size from less than 1% to 10.9% of the pool, with the top ten loans constituting 50.8% of the pooled loan balance. Six loans, constituting 6.3% of the pool, have defeased and are secured by US government securities. One loan, constituting 10.9% of the pooled balance, has an investment-grade structured credit assessment.

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 22, compared to 26 at Moody's last review.

As of the August 17, 2020 remittance report, loans representing 79.8% were current or within their grace period on their debt service payments, 0.8% were beyond their grace period but less than 30 days delinquent, 0.5% were between 30 -- 59 days delinquent, 2.1% were 60 -- 89 days delinquent and 16.8% were greater than 90 days delinquent or REO.

Twelve loans, constituting 15.0% 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.

One loan has been liquidated from the pool with realized loss of $2.4 million (for a loss severity of 84%). Ten loans, constituting 21.5% of the pool, are currently in special servicing. Six of the specially serviced loans, representing 10.5% of the pool, have transferred to special servicing since March 2020.

The largest loan in special servicing is the Two Westlake Park Loan ($88.2 million -- 9.3% of the pool), which is secured by a 450,000 SF office building located in Houston, Texas. The property was developed in 1982 and primarily consists of a 17-story office tower and a seven-story parking garage located within the Energy Corridor/West Katy Freeway office submarket of Houston, Texas. The property is part of a larger complex known as WestLake Park, which contains approximately 2.3 million SF of Class A office space. The loan transferred to special servicing in July 2018 due to imminent monetary default. The property's performance declined significantly in recent years after the two largest tenants at securitization, ConocoPhillips (46.0% of the NRA; lease expiration November 2019) and BP (36.2% of the NRA; lease expiration in June 2017), vacated at or prior to their initial lease expiration dates. The property has not backfilled its vacant space and the property was only 6% leased as of December 2019. According to CBRE, the Katy Freeway Class A office submarket had a vacancy of 20.5% in Q2 2020. The property became REO in June 2020 and is being listed for sale. Due to the property's distressed occupancy and the high submarket office vacancy, Moody's anticipates a significant loss on this loan.

The second largest loan in special servicing is Bend River Promenade ($25.8 million -- 2.7% of the pool), which is secured by a 252,147 SF retail center located in Bend, Oregon. The loan transferred to special serving in April 2020 in relation to the coronavirus outbreak and is last paid through its April 2020 payment date. The property was performing well prior to 2020 with an occupancy of 96% and actual NOI DSCR of 1.84X as of year-end 2019. The largest tenants include Macy' (40% of NRA; lease expiration in January 2024); Hobby Lobby (25%; lease expiration in January 2026 and TJ Maxx (11%; lease expiration in May 2021). The special servicer is currently discussing potential resolution options with the borrower.

The next largest loan was secured by a parking facility within the Philadelphia International Airport (2.3% of the pool) which transferred due to hardships associated with the coronavirus pandemic. The remaining seven specially serviced loans are primarily secured primarily by retail properties.

Moody's has also assumed a high default probability for two poorly performing loans, constituting 1.6% of the pool, and has estimated an aggregate loss of $79.4 million (38% expected loss on average) from these troubled loans and specially serviced loan.

Moody's received full year 2019 operating results for 97% of the pool and partial year 2020 operating results for 68% of the pool. Moody's weighted average conduit LTV is 104%, compared to 102% 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 16% to the most recently available net operating income (NOI). Moody's value reflects a weighted average capitalization rate of 9.8%.

Moody's actual and stressed conduit DSCRs are 1.79X and 1.10X, respectively, the same as 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 loan with a structured credit assessment is the St. Johns Town Center Loan ($103.5 million -- 9.7% of the pooled balance), which is secured by a 981,000 SF component of a 1.4 million SF super-regional outdoor mall located in Jacksonville, Florida. The loan represents a pari passu interest in a $203.5 million senior loan. The property is also encumbered by a $146.5 million B-note which contribute to the transaction as non-pooled rake bonds. The loan sponsor is a joint venture between subsidiaries of Simon Property Group (SPG), Inc. and Deutsche Bank Asset & Wealth Management with SPG managing the property. The mall is anchored by Dillard's, Target, Dick's Sporting Goods, Ashley Furniture, and Nordstrom. Dillard's, Target and Ashely Furniture are not part of the collateral and own their own spaces. As of March 2020, the property was 88% occupied, compared to 95% as of December 2019, and 98% in December 2018. Overall performance has improved since securitization with reported year-end 2019 NOI increasing to $36.8 million from $31.3 million at securitization. The property is considered the dominant mall in the area and the loan was current as of the August 2020 remittance date. Moody's structured credit assessment and stressed DSCR on the pooled portion are aaa (sca.pd) and 1.61X, respectively, the same as at last review. The Moody's total debt LTV including the B-note was 86.4%.

The top three conduit loans represent 18% of the pool balance. The largest loan is the Gateway Center Phase II Loan ($75.0 million -- 7.9% 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 December 2019, the property was 100% leased, unchanged from 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. Through year-end 2019 the property performance has improved since securitization and revenue has continued to increase over the past three years. The loan is interest-only throughout the loan term. The loan was current as of its August 2020 payment date and Moody's LTV and stressed DSCR are 114% and 0.78X, respectively, the same as at the last review.

The second largest loan is the Crossings at Corona Loan ($66.6 million -- 7.0% of the pool), which is secured by an 834,000 SF component of an approximately 962,200 SF power center located 50 miles south-east of Los Angeles in Corona, California. The center is anchored by a Kohl's, Edwards Cinemas (Regal) and Best Buy and is also shadow anchored by a Target. As of December 2019, the property was 81% leased, compared to 86% as of December 2018 and 97% at securitization. Toys R Us (7.6% of the NRA) closed in April 2018 in conjunction with the bankruptcy of the company. As a result, the loan is on the servicer's watchlist due to low DSCR (NCF DSCR of 1.08X) and low occupancy. The loan is current as of the August 2020 payment date and Moody's LTV and stressed DSCR are 140% and 0.73X, respectively, compared to 130% and 0.77X at Moody's last review.

The third largest loan is the CTO NNN Portfolio Loan ($30.0 million -- 3.2% of the pool), which is secured by six single tenant retail properties, located in six states, totaling 266,764 SF. The properties are leased to six tenants; Lowes, Harris Teeter, Rite Aid, Walgreens, and Big Lots. The loan is interest-only throughout the loan term. Property performance has been stable since securitization and Moody's LTV and stressed DSCR are 103% and 0.99X, respectively, the same as at the 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 https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.

At least one ESG consideration was material to the credit rating action(s) announced and described above.

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.

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.

Dariusz Surmacz
Vice President - Senior 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

No Related Data.
© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

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Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

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