KBRA Affirms All Ratings for JPMCC 2014-DSTY

KBRA affirms all of its outstanding ratings for JPMCC 2014-DSTY, a $430.0 million single-borrower CMBS transaction. The affirmations follow a surveillance review of the transaction. The ratings reflect the ongoing interest shortfalls on each of the rated classes and the high likelihood that neither the accrued and unpaid interest nor principal balance will be paid in full upon disposition of the collateral.

The transaction collateral consists of two, non-recourse, mortgage loans which are secured by distinct phases of Destiny USA, a super-regional mall located in Syracuse, New York. The first loan has a balance of $300.0 million and is secured by a mortgage on approximately 1.2 million of the 1.5 million sf in Phase I of the project, which was formerly known as Carousel Center. The second mortgage loan has a balance of $130.0 million and is secured by a mortgage on an 874,200 sf expansion parcel, which is known as Phase II. Although the loans originally had five-year terms with a maturity date in 2019, a forbearance agreement was in effect through June 2024. However, according to the special servicer, the borrower was informed that it would need to make a $38.9 million paydown to meet the debt yield test for the upcoming one-year extension. The borrower confirmed that they are not in a position to make the payment. Therefore, the special servicer has terminated the forbearance agreement and is planning enforcement action.

KBRA analyzed the cash flow for the properties utilizing information from the trustee and servicer to determine KNCF. Although the loans are not cross-collateralized or cross-defaulted, the credit performance of each loan is predicated on the overall performance of the mall, which KBRA views as a single economic entity. The analysis produced an aggregate KNCF of $9.8 million and a KBRA value of $65.3 million, which considers the estimated liquidation value of each of the phases. The resulting in-trust KLTV is 658.8%, compared to 393.3% at last review and 82.7% at securitization. KBRA maintains the loans’ K-LOC designations and KPOs of Underperform.

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