Press Release

DBRS Confirms Ratings of Deco 2014-Tulip Limited

October 12, 2018

DBRS Ratings Limited (DBRS) confirmed its ratings on the following classes of Commercial Mortgage-Backed Floating-Rate Notes Due July 2024 (the notes) issued by Deco 2014-Tulip Limited (the Issuer):

-- Class A at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (high) (sf)
-- Class D at BBB (sf)
-- Class E at BB (high) (sf)

The Class A, B and C notes carry Stable trends while the Class D and E notes maintain Negative trends.

The confirmations reflect the transaction’s overall stable loan metrics. The Negative trends on the two junior tranches were maintained as a result of the continued deterioration of asset performance from last year coupled with the higher exposure of the junior notes at maturity resulting from the 50% pro rate and 50% sequential principal pay down mechanism.

Deco 2014-Tulip Limited was originally secured by two loans: the Windmolen loan, which was repaid in Q1 2015, and the Orange loan. The Orange loan is secured by eight retail properties (11 at issuance) primarily located in suburban areas of the Netherlands. The assets are concentrated in Heerlen (26.9%), Alphen aan den Rijn (18.8%) and Amsterdam (17.3%). Although DBRS considers the majority of the assets to be in suburban locations, DBRS notes that many of the individual assets are part of the main shopping areas in their prospective markets and benefit from close proximity to local public transit stations.

The projected annual gross rental income decreased to approximately EUR 13.0 million as of the Q2 2018 interest payment date (IPD) from EUR 13.6 million at last review, which represents a drop of -4.4%. The decrease is mainly attributed to the loss of H&M, a tenant that vacated the Corio Center upon its lease expiration in January 2018 and paid a rent of approximately EUR 470K per annum.

The vacancy rate across the Orange portfolio has increased steadily to approximately 16.8% as of July 2018 IPD from 1.8% since issuance. The lease expiry profile of the portfolio shows an additional 2.1% of base rent due to expire before YE2018 as well as 18.7% scheduled to expire throughout 2019, which may further drive up the vacancy rate before the scheduled loan maturity in July 2019.

At issuance, DBRS commented on the negative trend of the Dutch retail market, which was characterised by increasing vacancies and decreasing rental rates for small-scale strip centres—the asset type that largely makes up the Orange portfolio. According to CBRE, the downward trend on the retail market may have reached its bottom with consumer confidence reaching its highest level in 17 years. DBRS also reported lower vacancies for prime retail assets in the Randstad region. However, DBRS still maintains an overall negative outlook on secondary retail assets that primarily make up the Orange loan’s remaining assets.

DBRS has accounted for the H&M’s departure and the further deterioration of the retail market conditions during its review in 2017 by underwriting a higher vacancy assumption.

The latest valuation of the portfolio is dated in April 2017, when the appraiser estimated a total EUR 161.3 million market value. DBRS understands that a new valuation has been commissioned by the servicer and will be available in the next IPD.

Given the approaching maturity date, DBRS will continue to monitor the transaction on a quarterly basis and will update its ratings to reflect any future developments of the loan.

DBRS currently rates Deutsche Bank AG with a Long-Term Critical Obligations rating of A (high) and Short-Term Critical Obligations rating of R-1 (middle), both with Negative trends, which satisfies the minimum counterparty required rating laid out in DBRS’s “Legal Criteria for European Structured Finance Transactions” methodology.

All figures are in euros unless otherwise noted.

The principal methodology applicable to the ratings is: “European CMBS Rating and Surveillance Methodology”.

DBRS has applied the principal methodology consistently and conducted a review of the transaction in accordance with the surveillance section of the principal methodology.

A review of the transaction legal documents was not conducted as the legal documents have remained unchanged since the most recent rating action.

Other methodologies referenced in this transaction are listed at the end of this press release.

These may be found on at:

For a more detailed discussion of the sovereign risk impact on Structured Finance ratings, please refer to “Appendix C: The Impact of Sovereign Ratings on Other DBRS Credit Ratings” of the “Rating Sovereign Governments” methodology at:

The sources of data and information used for the ratings include Link Asset Services (UK) and their delegates.

DBRS did not rely upon third-party due diligence in order to conduct its analysis.

At the time of the initial rating, DBRS was not supplied with third-party assessments. However, this did not impact the rating analysis.

DBRS considers the data and information available to it for the purposes of providing this rating to be of satisfactory quality.

DBRS does not audit or independently verify the data or information it receives in connection with the rating process.

The last rating action on this transaction took place on October 13, 2017 when Classes A through C were confirmed with Stable trends and Class D and E were downgraded each one notch and had their Negative trends maintained.

The lead analyst responsibilities for this transaction have been transferred to Christopher Horst.

Information regarding DBRS ratings, including definitions, policies and methodologies, is available on

To assess the impact of changing the transaction parameters on the rating, DBRS considered the following stress scenarios, as compared to the parameters used to determine the rating (the “Base Case”):

A decrease of 10% and 20% in the DBRS NCF, derived by looking at comparable properties, market rents, market occupancies in addition to expenses ratios, capital expenditures and re-tenanting costs, would lead to the following ratings in the transaction, as noted below for each class, respectively:

Class A Notes Risk Sensitivity:
-- 10% decline in DBRS NCF, expected rating of Class A at AAA (sf)
-- 20% decline in DBRS NCF, expected rating of Class A at AAA (sf)

Class B Notes Risk Sensitivity:
-- 10% decline in DBRS NCF, expected rating of Class B at AA (sf)
-- 20% decline in DBRS NCF, expected rating of Class B at A (high) (sf)

Class C Notes Risk Sensitivity:
-- 10% decline in DBRS NCF, expected rating of Class C at A (sf)
-- 20% decline in DBRS NCF, expected rating of Class C at BBB (high) (sf)

Class D Notes Risk Sensitivity:
-- 10% decline in DBRS NCF, expected rating of Class D at BBB (low) (sf)
-- 20% decline in DBRS NCF, expected rating of Class D at BB (high) (sf)

Class E Notes Risk Sensitivity:
-- 10% decline in DBRS NCF, expected rating of Class D at BB (high) (sf)
-- 20% decline in DBRS NCF, expected rating of Class D at BB (sf)

For further information on DBRS historical default rates published by the European Securities and Markets Authority (“ESMA”) in a central repository, see:

Ratings assigned by DBRS Ratings Limited are subject to EU and US regulations only.

Lead Analyst: Christopher Horst, Senior Financial Analyst
Rating Committee Chair: Jerry van Koolbergen, Managing Director
Initial Rating Date: 26 September 2014

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The rating methodologies used in the analysis of this transaction can be found at:

-- European CMBS Rating and Surveillance Methodology
-- Legal Criteria for European Structured Finance Transactions
-- Derivative Criteria for European Structured Finance Transactions
-- Interest Rate Stresses for European Structured Finance Transactions

A description of how DBRS analyses structured finance transactions and how the methodologies are collectively applied can be found at:

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