DBRS Morningstar Confirms All Ratings on BANK 2018-BNK14

DBRS, Inc. (DBRS Morningstar) confirmed the following ratings of the Commercial Mortgage Pass-Through Certificates, Series 2018-BNK14 issued by BANK 2018-BNK14:

-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class X-A at AAA (sf)
-- Class A-S at AAA (sf)
-- Class B at AA (high) (sf)
-- Class X-B at A (high) (sf)
-- Class C at A (sf)
-- Class D at BBB (high) (sf)
-- Class X-D at BBB (sf)
-- Class E at BBB (low) (sf)
-- Class X-F at BB (high) (sf)
-- Class F at BB (sf)
-- Class X-G at BB (low) (sf)
-- Class G at B (high) (sf)

The rating confirmations reflect the steady performance of the majority of the underlying collateral. Classes X-F, F, X-G, and G continue to carry Negative trends, reflecting the uncertainty of resolution for the pool’s four specially serviced loans. All other trends are Stable.

As of the December 2021 remittance, 61 of the original 62 loans remain in the pool, with an aggregate trust balance of $1.28 billion, representing a collateral reduction of approximately 7.5% since issuance due to loan amortizations and the payoff of the Prudential – Digital Realty Portfolio loan, which was originally the fourth-largest loan in the pool. No loans have been defeased. Loans backed by retail properties represent the largest property type concentration for the pool at 40.6% of the current trust balance, followed by office properties at 23.7% of the pool. Of the loans secured by retail properties, 14.9% are shadow rated investment-grade.

There are four specially serviced loans, representing 9.3% of the pool, all of which are secured by hotel or retail properties, including the CoolSprings Galleria loan (Prospectus ID#18, 2.2% of the pool), which was shadow rated by DBRS Morningstar at issuance. In addition, eight loans, representing 15.1% of the current trust balance, are on the servicers’ watchlist and are being monitored for a variety of reasons, including low debt service coverage ratios (DSCR), low occupancy, and life safety issues flagged upon site inspections.

The largest specially serviced loan is secured by the Doubletree Grand Naniloa Hotel (Prospectus ID#12, 3.8% of the pool), a 388-key, full-service hotel in Hilo, Hawaii. The loan transferred to special servicing in June 2020 for imminent monetary default resulting from travel restrictions brought on by the Coronavirus Disease (COVID-19) pandemic. The special servicer is seeking lender approval to move forward with a foreclosure. An updated appraisal was provided in August 2021, which valued the property at $56.4 million on an as-is basis, a 44% drop from the appraised value of $100.1 million at issuance but a 2.5% increase from the previous value of $55.0 million in November 2020. The hotel’s performance has lagged since issuance and despite the hotel’s slight improvement according to the trailing 12 months (T-12) period ended September 2021 Smith Travelers Report (STR), the underlying collateral is underperforming across all three metrics in comparison to the Hawaii submarket.

The largest loan on the servicer’s watchlist is the Starwood Hotel Portfolio (Prospectus ID#5, 5.1% of the pool), which consists of 22 hotel properties containing a total of 2,943 keys, located across 12 states and 17 cities throughout the continental U.S. The loan was added to the servicer’s watchlist in November 2021 for low DSCR and declining occupancy after mandated state closures took effect in response to the ongoing pandemic. As such, the special servicer granted coronavirus relief that allowed the borrower to defer furniture, fixtures, and equipment reserve payments for 12 months from June 2020 to May 2021, with a 12-month repayment period from June 2021 to May 2022. As of the T-12 period ended June 2021 STR report, the weighted average occupancy, average daily rate (ADR), and revenue per available room (RevPAR) for the portfolio declined year-over-year (YOY) to 45.4% (-23.3% YOY), $92.93 (-19.2%), and $42.75 (-36.9%), respectively. The year-to-date period ended June 2021 STR reported an average occupancy of 50.9% (+15.5% YOY), ADR of $97.9 (-10.4% YOY), and RevPAR of $50.75 (+4.1% YOY), which are in line with the competitive set’s.

At issuance, DBRS Morningstar assigned investment-grade shadow ratings to 685 Fifth Avenue Retail (Prospectus ID#1, 7.9% of the pool), Aventura Mall (Prospectus ID#2, 7.9% of the pool), Millennium Portfolio (Prospectus ID#9, 3.9% of the pool), 1745 Broadway (Prospectus ID#10, 3.9% of the pool), CoolSprings Galleria (Prospectus ID#18, 2.2% of the pool), and Pfizer Building (Prospectus ID#19, 1.1% of the pool). DBRS Morningstar has confirmed that the performance of these loans remains consistent with the investment-grade loan characteristics.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

Classes X-A, X-B, X-D, X-F, and X-G are interest-only (IO) certificates that reference a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated applicable reference obligation tranche adjusted upward by one notch if senior in the waterfall.

All ratings are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by DBRS Morningstar.

DBRS Morningstar provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Prospectus ID#5 – Starwood Hotel Portfolio (5.1% of the pool)
-- Prospectus ID#12 – Doubletree Grand Naniloa Hotel (3.8% of the pool)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com. The platform includes issuer and servicer data for most outstanding CMBS transactions (including non-DBRS Morningstar rated), as well as loan-level and transaction-level commentary for most DBRS Morningstar-rated and -monitored transactions.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is North American CMBS Surveillance Methodology (March 26, 2021), which can be found on dbrsmorningstar.com under Methodologies & Criteria. For a list of the structured-finance-related methodologies that may be used during the rating process, please see the DBRS Morningstar Global Structured Finance Related Methodologies document, which can be found on dbrsmorningstar.com in the Commentary tab under Regulatory Affairs. Please note that not every related methodology listed under a principal structured finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482/baseline-macroeconomic-scenarios-application-to-credit-ratings.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar’s outlooks and ratings are monitored.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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