Press Release|CMBS

KBRA Downgrades One Rating and Affirms All Other Ratings for COMM 2014-CCRE15

9 Jan 2025 | New York

KBRA downgrades the rating of one class of certificates and affirms all other outstanding ratings for COMM 2014-CCRE15, a $193.6 million CMBS conduit transaction, which has five assets remaining in the underlying mortgage pool, all of which have been identified as K-LOCs. The rating actions follow a surveillance review of the transaction and are based on an increase in KBRA’s estimated losses for three assets (54.3% of the pool balance). As of the December 2024 remittance period, there are three specially serviced assets (45.6%), including two in foreclosure (38.0%) and one that remains current (7.7%). The details of the remaining loans are outlined below.

625 Madison Avenue (largest, 38.0%, K-LOC, Underperform)

At closing, the loan was collateralized by a 0.80 acre of land underlying a 525,031 sf, Class-A office building located in the Plaza District of Manhattan in New York City. The sole source of payment for the loan at securitization was derived from ground rent payments received from the owner of the improvements. The loan was structured with an ARD of December 2018 with a final maturity date in December 2026.
KBRA maintains the loan's K-LOC designation and its KPO of Underperform based on its history with the special servicer. The loan transferred to the special servicer in July 2023 due to non-monetary default. The mezzanine loan failed to pay off at its June 2023 maturity date. Subsequently, in August 2023, the mezzanine lender, SL Green, completed a UCC foreclosure sale and as a result owned both the fee and leasehold interests. The special servicer executed a modification in December 2023 which pre-approved an equity transfer to Related Companies, required a $25.0 million paydown and consented to the termination of the ground lease. In addition, Related provided an interest carry guaranty and completion guaranty. According to news publications, SL Green sold the fee interest for $632.5 million. As part of the sale, SL Green originated $209.8 million of preferred equity to be used towards the demolition and redevelopment of the property. Per a local news publication, the property is in early stages of demolition after demolition permits were filed in September 2024. The loan was returned to the master servicer in November 2024.
An appraisal dated November 2023 valued the vacant land at $536.8 million. At this time, KBRA does not estimate a loss on the whole loan of $168.9 million.

25 West 45th Street (2nd largest, 32,7%, K-LOC, Underperform, Foreclosure)

The loan is collateralized by a Class-B office tower located in New York City’s Midtown Manhattan.
KBRA maintains the loan's K-LOC designation and its KPO of Underperform based on its status with the special servicer. The loan transferred to the special servicer in November 2023 for imminent maturity default and subsequently failed to pay off at its January 2024 maturity date. According to servicer commentary, the lender filed a foreclosure complaint in May 2024 and a receiver was appointed in July 2024. Occupancy was 75.3% as of June 2024, compared to 68.4% at last review and 95.1% at closing.
The servicer-reported occupancies and DSCs are: 76.7% / -0.09x (YTD June 2024), 70.5% / 1.56x (FY 2023), N/A / 0.98x (FY 2022); at issuance these were: 95.1% / 1.29x. An appraisal dated April 2024 valued the property at $65.0 million ($350 per sf), which is 39.3% below the $107.0 million ($578 per sf) value at issuance. KBRA's analysis resulted in an estimated loss of $16.5 million (26.0% estimated loss severity) on the $63.3 million loan balance. The loss is based on a KBRA liquidation value of $50.0 million ($266 per sf). The value is derived from a direct capitalization approach using a KNCF of $4.5 million and a capitalization rate of 9.00%.

600 Commonwealth (3rd largest, 16.3%, K-LOC, Underperform)

The loan is collateralized by a 315,949 sf, Class-A office building located in Los Angeles, California, less than two miles west of the city's CBD.
KBRA maintains the loan's K-LOC designation and its KPO of Underperform based on its history with the special servicer and upcoming maturity date. The loan transferred to the special servicer in December 2023 for imminent maturity default and subsequently failed to pay off at its January 2024 maturity date. The loan was extended to January 2025 and returned to the master servicer in October 2024. KBRA requested an update on the upcoming maturity but did not receive a response at the time of this review. Occupancy was 40.4% as of June 2024, unchanged from last review and down from 91.5% at closing. The sole remaining tenant, Los Angeles County Department Public Health, has a lease scheduled to expire in February 2025. According to news publications, the sponsor has plans to redevelop the property to live/work apartments.
The servicer-reported occupancies and DSCs are: 38.3% / 0.40x (YTD March 2024), 38.3% / 0.51x (FY 2023), 63.6% / 1.25x (FY 2022); at issuance these were: 91.5% / 1.55x. An appraisal dated April 2024 valued the property at $31.4 million ($99 per sf), which is 37.2% below the $50.0 million ($158 per sf) value at issuance. KBRA's analysis resulted in an estimated loss given default of $5.8 million (18.3% estimated loss severity) on the $31.6 million loan balance. The loss is based on a KBRA liquidation value of $25.8 million ($78 per sf). The value is derived from a direct capitalization approach using a KNCF of $2.9 million, which assumes a vacancy rate of 33.0%, a capitalization rate of 9.50%, and a downward adjustment to account for TI/LC costs and income lost during the stabilization period.

River Falls Shopping Center (4th largest, 7.7%, K-LOC, Underperform, Specially Serviced)

The loan is collateralized by a 287,821 sf power center located in Clarksville, Indiana, approximately six miles north of the Louisville, Kentucky CBD. The largest collateral tenants are Old Time Pottery (29.6% of collateral sf) and Dick's Sporting Goods (17.1%). The third largest tenant at issuance, Gordmans (17.3%), vacated after filing for bankruptcy in 2017.
KBRA maintains the loan's K-LOC designation and its KPO of Underperform based on its status with the special servicer and upcoming maturity. The loan transferred to special servicing in May 2020 for imminent default and a forbearance agreement was executed in September 2021. The borrower complied with the forbearance terms and all deferred amounts were repaid. The loan was scheduled to mature in January 2024 and was subsequently modified with an extension through January 2025. Occupancy was 83.3% as of July 2024, compared to 77.7% at last review and 100% at closing. Harbor Freight (5.6% of collateral sf, 13.8% of base rent) took over the former JoAnn Fabrics space as expected.
The servicer-reported occupancies and DSCs are: 83.3% / 1.32x (YTD June 2024), 83.3% / 1.05x (FY 2021); at closing these were: 100% / 1.37x. An appraisal dated July 2024 valued the property at $20.6 million ($69 per sf), which is 14.1% below the $24.0 million ($81 per sf) value at issuance. At this time, KBRA does not estimate a loss on the $14.9 million loan balance.

840 Westchester (5th largest, 5.2%, K-LOC, Underperform, Foreclosure)

The loan is collateralized by a 47,963 sf mixed use (retail/office) building located in the Bronx, New York.
KBRA maintains the loan’s K-LOC designation and its KPO of Underperform based on its status with the special servicer. The loan transferred to the special servicer in September 2018 due to payment default. The loan was in cash management and failed to pay off at its January 2024 maturity date. Per special servicer commentary, the guarantor filed for bankruptcy and the special servicer is actively involved as a creditor. A foreclosure complaint was filed with a hearing set for January 2025.
The servicer-reported occupancies and DSCs are: N/A / 1.62x (TTM September 2022), 100.0% / 1.30x (TTM September 2020); at closing these were: 100% / 1.35x. An appraisal dated April 2024 valued the property at $13.0 million ($271 per sf), which is 39.8% below the $21.6 million ($450 per sf) value at issuance. KBRA's analysis resulted in an estimated loss of $1.5 million (14.8% estimated loss severity) on the $10.2 million loan balance. The loss is based on a KBRA liquidation value of $10.5 million ($219 per sf). The value is derived from a direct capitalization approach using a KNCF of $1.0 million, which assumes a vacancy rate of 10.0%, a blended capitalization rate of 8.99%, and a downward adjustment to account for TI/LC costs and income lost during the stabilization period.

Details concerning the rating change are as follows:

Class F to CCC (sf) from B (sf)

KBRA affirms the following ratings:

Class B at AA (sf)
Class PEZ at A- (sf)
Class C at A- (sf)
Class D at BBB (sf)
Class E at BB+ (sf)

Rating Sensitivities

Future rating actions will be dependent upon the ongoing assessment of the timing and likelihood of ultimate payment of principal and accrued interest on the rated certificates. The assessment will consider the expected and actual losses on the remaining assets in the transaction, as well as the magnitude and extent of interest shortfalls, if any, on the certificates.

To access ratings and relevant documents, click here.

Related Publication

CMBS: COMM 2014-CCRE15 Pre-Sale Report

KBRA Downgrades One Rating and Affirms All Other Ratings for COMM 2014-CCRE15

Rating Sensitivities

Related Publication

Methodologies