CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed all classes of DBCCRE 2014-ARCP Mortgage Trust Commercial Mortgage Pass-Through Certificates. A complete list of rating actions follows at the end of this release.
The DBCCRE 2014-ARCP Mortgage Trust Commercial Mortgage Pass-Through Certificates represent the beneficial interest in a trust that holds a 10-year, fixed-rate, interest-only $620 million mortgage loan secured by the fee and leasehold interests in 82 office, retail, and industrial properties with a total of 7.2 million square feet (sf) located in 30 states and Puerto Rico. Proceeds from the loan were used to recapitalize the portfolio as the sponsor, American Realty Capital Properties, Inc. (ARCP), purchased all of the collateral assets within the last 18 months using cash equity and existing unsecured credit facilities. The certificates will follow a sequential-pay structure.
KEY RATING DRIVERS
The affirmations and Stable Rating Outlooks are the result of stable property performance. The annualized June 30, 2014 servicer-reported net operating income (NOI) has improved slightly from performance at issuance to 1.79x. The portfolio remains 100% occupied.
The loan is secured by 82 commercial properties including 68 retail, nine office and five industrial assets. The properties are located in 30 states and Puerto Rico and are occupied by 24 distinct tenants in 14 different industries. No state represents more than 16.5% of total portfolio value and only three states represent more than 10% of the total portfolio value. The properties were all acquired by the sponsor in the 18 months prior to securitization for at a total acquisition cost of approximately $980.1 million (implying an all-in loan-to-cost ratio of 63.3 %).
Approximately 66% of Fitch's total revenue is derived from tenants rated investment grade ('BBB-' or higher). An additional 21% of Fitch's total revenue is leased to tenants that are rated between 'B-' and 'BB+'. The remaining 13% of the portfolio is leased to nationally recognized tenants. Nonrated tenants include nationally recognized names such as Tractor Supply, Talbots, and Cracker Barrel.
The loan is sponsored by ARCP. In October 2014 ARCP replaced its CEO amid controversy regarding accounting errors and financial filings in 2013 and 2014. Due to the single purpose and bankruptcy remote nature of the borrower structure, as well as the stable property level performance, Fitch does not expect the disruptions at the sponsor level to have an impact on this transaction.
RATING SENSITIVITIES
No rating changes are expected unless there are material declines in property occupancy or cash flow.
A detailed description of Fitch's rating analysis including key rating drivers, stresses, rating sensitivity, analysis, model, criteria application and data adequacy is available in Fitch's new issue report dated March 17, 2014.
Fitch affirms the following class:
--$345.4 million class A at 'AAAsf'; Outlook Stable.
Fitch does not rate classes B through F or the interest-only class X.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 2014);
--'Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions' (Sept. 2014).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria - Effective from 20 May 2014 to 4 August 2014
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821
Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=772328
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=957337
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.