Kroll Bond Rating Agency Assigns Preliminary Ratings to MSBAM 2014-C19

NEW YORK--()--Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to 18 classes of the MSBAM 2014-C19 transaction (see ratings list below). MSBAM 2014-C19 is a $1.5 billion CMBS conduit transaction collateralized by 77 fixed rate commercial mortgage loans that are secured by 114 properties.

The underlying collateral properties are located in 29 states, the Commonwealth of The Bahamas, the Commonwealth of Puerto Rico, and Ontario, Canada, with three states representing more than 10.0% of the pool balance: California (18.1%), New York (13.4%), and Illinois (11.1%). There is exposure to all of the major property type segments, with four that represent more than 15.0% of the pool balance: retail (25.4%), office (24.0%), multifamily (17.1%), and lodging (15.6%). The loans have principal balances ranging from $2.3 million to $133.0 million for the largest loan in the pool, Koll Airport Business Center (9.0%), a 1.2 million sf, Class-B flex office complex located in Irvine, California. The top five loans, which also include 300 North LaSalle (8.9%), TKG Retail Portfolio B (7.4%), Gantry Park Landing (5.1%), and Linc LIC (4.8%), represent 35.1% of the initial pool balance, while the top 10 loans represent 52.9%.

KBRA’s analysis of the transaction incorporated our multi-borrower rating process that begins with our analysts' evaluation of underlying collateral properties' financial and operating performance, which determine KBRA’s estimate of sustainable net cash flow (KNCF) and KBRA value using our CMBS Property Evaluation Guidelines. On an aggregate basis, KNCF was 5.2% less than the issuer cash flow. KBRA capitalization rates were applied to each asset’s KNCF to derive values that were, on an aggregate basis, 35.7% less than third party appraisal values. The pool has an in-trust KLTV of 96.8% and an all-in KLTV of 106.6%. The model deploys rent and occupancy stresses, probability of default regressions, and loss given default calculations to determine losses for each collateral loan, which are then used to assign our credit ratings.

For complete details on the analysis, please see our presale report, MSBAM 2014-C19 published today at www.kbra.com. The preliminary ratings are based on information known to KBRA at the time of this publication. Information received subsequent to this release could result in the assignment of final ratings that differ from the preliminary ratings.

Preliminary Ratings Assigned: MSBAM 2014-C19

   
Class   Class Balance   Expected Rating
Class A-1   $50,900,000   AAA(sf)
Class A-2   $293,600,000   AAA(sf)
Class A-3   $240,000,000   AAA(sf)
Class A-4   $333,319,000   AAA(sf)
Class A-SB   $111,600,000   AAA(sf)
Class X-A   $1,121,332,000*   AAA(sf)
Class X-B   $71,692,000*   AAA(sf)
Class X-C   $108,456,000*   AAA(sf)
Class X-D   $64,339,000*   BBB-(sf)
Class X-E   $36,765,000*   BB-(sf)
Class X-F   $25,736,000 *   B-(sf)
Class X-G   $42,279,000*   NR
Class A-S   $91,913,000   AAA(sf)
Class B   $71,692,000   AA(sf)
Class PST   $272,061,000**   A-(sf)
Class C   $108,456,000   A-(sf)
Class D   $64,339,000   BBB-(sf)
Class E   $36,765,000   BB-(sf)
Class F   $25,736,000   B-(sf)
Class G   $42,279,820   NR
Class LNC***   $130,000,000   NR

*Notional balance

**Maximum amount that can be issued
***Loan-specific class
 

17g-7 Disclosure

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report entitled CMBS: MSBAM 2014-C19 17g-7 Disclosure Report.

Related publications: (available at www.kbra.com)

CMBS: MSBAM 2014-C19 Presale Report 
CMBS: U.S. CMBS Multi-Borrower Rating Methodology, published February 23, 2012 
CMBS Property Evaluation Guidelines, published June 10, 2011

About Kroll Bond Rating Agency KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

Contacts

Analytical Contacts:
Kroll Bond Rating Agency
Monika Joshi, 646-731-2460
mjoshi@kbra.com
or
Yee Cent Wong, 646-731-2374
ywong@kbra.com
or
Dayna Volpe, 646-731-2391
dvolpe@kbra.com
or
Ken Kor, 646-731-2339
kkor@kbra.com

Contacts

Analytical Contacts:
Kroll Bond Rating Agency
Monika Joshi, 646-731-2460
mjoshi@kbra.com
or
Yee Cent Wong, 646-731-2374
ywong@kbra.com
or
Dayna Volpe, 646-731-2391
dvolpe@kbra.com
or
Ken Kor, 646-731-2339
kkor@kbra.com