Fitch Ratings has affirmed seven classes of Deutsche Bank Securities, Inc's COMM 2014-CCRE14 commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this release.
KEY RATING DRIVERS
The affirmations are based on the stable performance of the underlying collateral pool. As of the December 2014 remittance, the pool has had no delinquent or specially serviced loans and three loans on the servicer watchlist. Two of the properties are encountering occupancy issues that were anticipated at issuance and represent minimal asset risk due to established loan reserves. Fitch has designated a third watchlist loan as a Fitch loan of concern due to decline in occupancy since issuance.
The pool's aggregate principal balance has been paid down by approximately 0.5% since issuance. Fifty-seven (91.4% of the pool) of the 60 pool loans reported partial year 2014 financials or rolling 12-month financials. Based on full year or annualized financial statements, the pool's overall net operating income (NOI) improved 11.1% since issuance. However, the improvement reflects using annualized estimates and is not directly comparable to issuance.
The largest loan of the pool (11.32%) is secured by 60 Hudson Street, a 24 story, 1,098,735 square foot (sf) telecommunications complex located in New York, NY. The loan is sponsored by Hudson Telegraph Associates, which is ultimately controlled by Richard Czaja, co-president of the Stahl Organization and Kenneth Carmel. The sponsors have owned the property since 1981. The property serves as a carrier hotel or colocation center, a mission critical site for telecommunication firms such as Level 3 Communications, Verizon, Sprint, AT&T and XO Communications. The property is considered one of the three premier data centers in the world and offers connectivity through the Northeastern U.S., with access to virtually every carrier and network provider in the continental United States.
The second largest loan (4.65%) is secured by Google and Amazon Office Portfolio, a 1,057,809-sf office complex situated in Sunnyvale, CA in the heart of the Silicon Valley. The Silicon Valley submarket continues to be the largest U.S. employment base for technology companies and the space market is expanding by one million-sf in order to accommodate the grow needs of industry during this expansion cycle. The collateral of four buildings is part of a larger 260-acre campus that consists of more than 2 million square feet. The properties are only occupied by the Fitch rated investment grade entities Google Inc. and Amazon. Both companies have made significant investments into the properties and have committed to lease terms that extend into 2024. Due to significant tenant build-outs by both tenants, the buildings were not fully occupied until the second half of 2014.
The Fitch Loan of Concern (0.32%) is secured by a 159,836-sf anchored retail center located in Greenville, SC, four miles east of the central business district. Occupancy as September 2014 had fallen to 90% at the center from being fully occupied at issuance. The property could experience further volatility as a major tenant lease, consisting 22% of the net rentable area, expires during the first quarter of 2015. Fitch will continue to monitor the loan as the sponsor updates the servicer on the leasing activity during the first half of the year and addresses rollover concerns on-site.
RATINGS SENSITIVITY
The Rating Outlook for all classes remains Stable. Due to the recent issuance of the transaction and stable performance, Fitch does not foresee positive or negative ratings migration until a material economic or asset level event changes the transaction's portfolio-level metrics. Additional information on rating sensitivity is available in the report 'COMM 2014-CCRE14 Mortgage Trust' (Jan. 6, 2014), available at 'www.fitchratings.com'.
Fitch has affirmed the following classes:
COMM 2014-CCRE14 Commercial Mortgage Pass-Through Certificates
--$48.2 million class A-1 at 'AAAsf'; Outlook Stable;
--$355.1 million class A-2 at 'AAAsf'; Outlook Stable;
--$85.6 million class A-SB at 'AAAsf'; Outlook Stable;
--$150 million class A-3 at 'AAAsf'; Outlook Stable;
--$317.3 million class A-4 at 'AAAsf'; Outlook Stable;
--$1.095* billion class X-A at 'AAAsf'; Outlook Stable;
--$130.9 million class A-M at 'AAAsf'; Outlook Stable;
*Notional amount and interest only.
Fitch does not rate the $98,162,000 class B, $275,540,000 exchangeable class PEZ, $46,497,000 class C, $43,054,000 class D, $30,998,000 class E, $15,499,000 class F, $48,220,377 class G, the $187,713,000 interest-only class X-B, or the $94,717,377 interest-only class X-C.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 20, 2014);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 10, 2014).
A comparison of the transaction's Representations, Warranties, and Enforcement (RW&E) mechanisms to those of typical RW&Es for the asset class is available in the following reports:
--'COMM 2014-CCRE14 Mortgage Trust' (Jan. 6 2014).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608
COMM 2014-CCRE14 Mortgage Trust (US CMBS)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=728716
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=965735
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