Three 'AAA' Ratings Affirmed On COMM 2014-CCRE18 Mortgage Trust

  • We affirmed our 'AAA (sf)' ratings on three classes from COMM 2014-CCRE18 Mortgage Trust, a U.S. CMBS transaction.
  • The affirmations reflect our analysis of the transaction, which included a review of the credit characteristics and performance of the remaining assets in the pool, the transaction's structure, and the liquidity available to the trust.
  • While COVID-19 will likely have an accelerated effect on performance declines for certain properties, especially with retail and lodging exposure, today's rating actions do not specifically address the outbreak of the virus.
CENTENNIAL (S&P Global Ratings) March 26, 2020--S&P Global Ratings today affirmed its 'AAA (sf)' ratings on the class A-SB, A-4, and A-5 commercial mortgage pass-through certificates from COMM 2014-CCRE18 Mortgage Trust, a U.S. CMBS transaction.
For the affirmations, our expectation of credit enhancement was in line with the affirmed rating levels.
While COVID-19 will likely have an accelerated effect on performance declines for certain properties, especially with retail and lodging exposure, today's rating actions do not specifically address the outbreak of the virus. S&P Global Ratings acknowledges a high degree of uncertainty about the rate of spread and peak of the coronavirus outbreak. Some government authorities estimate the pandemic will peak around midyear, and we are using this assumption in assessing the economic and credit implications. In our view, the measures adopted to contain COVID-19 have pushed the global economy into recession (see our macroeconomic and credit updates here: www.spglobal.com/ratings). As the situation evolves, we will update our assumptions and estimates accordingly.
TRANSACTION SUMMARY
As of the March 17, 2020, trustee remittance report, the collateral pool balance was $768.4 million, which is 77.1% of the pool balance at issuance. The pool currently includes 39 loans and one real estate owned (REO) asset, down from 49 loans at issuance. Three of these assets ($28.3 million, 3.7%) are with the special servicer, four ($69.6 million, 9.1%) are defeased, and three ($62.0 million, 8.1%) are on the master servicer's watchlist.
We calculated a 1.35x S&P Global Ratings' weighted average debt service coverage (DSC) and 93.7% S&P Global Ratings' weighted average loan-to-value (LTV) ratio using a 7.67% S&P Global Ratings' weighted average capitalization rate. The DSC, LTV, and capitalization rate calculations exclude the two of the three specially serviced assets ($24.8 million, 3.2%) and the four defeased loans.
The top 10 nondefeased loans have an aggregate outstanding pool trust balance of $480.0 million (62.5%). Adjusting the servicer-reported numbers, we calculated an S&P Global Ratings' weighted average DSC and LTV of 1.38x and 96.0%, respectively, for the top 10 nondefeased loans.
To date, the transaction has experienced $9.3 million in principal losses, or 0.9% of the original pool trust balance. We expect losses to reach approximately 2.5% of the original pool trust balance in the near term, based on losses incurred to date and additional losses we expect upon the eventual resolution of two of the three specially serviced assets.
CREDIT CONSIDERATIONS
As of the March 17, 2020, trustee remittance report, three assets in the pool were with the special servicer, Rialto Capital Advisors LLC (Rialto). Details of the two largest specially serviced assets are as follows:
  • The 22 Exchange REO asset ($18.1 million, 2.4%) has a total reported exposure of $21.5 million. The asset is a 471-bed student housing property in Akron, Ohio. The loan was transferred to the special servicer on Jan. 9, 2018, because of imminent payment default and the property became REO on Dec. 28, 2018. Rialto stated that it is working to lease up the property and the current occupancy was 87% for the multifamily portion and 52% for the retail space. A $5.4 million appraisal reduction amount (ARA) is in effect against this asset. We expect a moderate loss (26%-59%) upon this asset's eventual resolution.
  • The Candlewood Suites Syracuse Airport loan ($6.7 million, 0.9%) has a total reported exposure of $7.4 million. The loan is secured by a 124-key extended-stay lodging property in North Syracuse, N.Y. The loan was transferred to the special servicer on Nov. 5, 2018, because the borrower stated that it could no longer fund property shortfalls. Rialto indicated that it has filed for foreclosure and expects it to close in the second quarter of this year. Recent financial data was not available. A $4.8 million ARA is in effect against this loan. We expect a significant loss (60% or greater) upon this loan's eventual resolution.
It is our understanding from Rialto that the remaining loan, Pine Terrace Apartments ($3.5 million, 0.5%), with the special servicer will be transferred back to the master servicer in the second quarter of this year as a corrected mortgage loan. We estimated losses for the aforementioned two specially serviced assets, arriving at a weighted-average loss severity of 63.2%.
We work across the world

From London to San Francisco, to our home base in (Saint Helier) Jersey, we’re looking for extraordinary and creative scientists to help us drive the field forward.

AC Investment Inc. currently does not act as an equities executing broker or route orders containing equities securities. If AC Invest’s business model were to change and it begins routing non-directed orders in NMS securities, it will comply with the disclosure requirement of Rule 606.

77 Massachusetts Avenue Cambridge, MA 02139 617-253-1000 pr@ademcetinkaya.com