Fitch Affirms MSBAM 2014-C16

CHICAGO--()--Fitch Ratings has affirmed 14 classes of Morgan Stanley Bank of America Merrill Lynch Trust 2014-C16. A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The affirmations are based on the stable performance of the underlying collateral pool. As of the April 2016 distribution date, the pool has no delinquent or specially serviced loans. Since issuance, the pool has experienced 1.2% collateral reduction. There are currently five loans on the servicer watchlist (5% of the pool), including one loan in the Top 15.

The watchlisted loan is Aspen Heights - Stillwater, which represents 3% of the pool. The loan is secured by a 231-unit, 792-bed student housing property located two miles from Oklahoma State University. Built in 2013, amenities at the property include two fitness centers, a resort-style swimming pool, clubhouse, volleyball court, tanning room and grilling areas. At issuance, the property was 99% occupied. Occupancy dipped to 88% at year-end (YE) 2014 before improving slightly to 90.7% as of October 2015. The loan has been flagged because the fiscal first quarter (1Q) 2015 (ending October 2015) net cash flow (NCF) debt service coverage ratio (DSCR) was reported to be 1.03x, down from the 2015 fiscal year end (ending July 2015) NCF DSCR of 1.18x. The most recent decline in DSCR should have triggered a cash flow sweep, although this has not yet been confirmed by the servicer. Fitch continues make attempts to collect information on this and other loans in the pool through the 17g-5 provider. The most recent round of questions was submitted on May 2, 2015, and at the time of this release, no updates have been received. This loan, which was structured with a five-year interest-only period, will continue to be monitored by Fitch.

The largest loan in the pool (11.6% of the pool) is secured by Arundel Mills Mall, a 1.5 million square foot (sf) super-regional mall, and Arundel Mills Marketplace, an adjacent anchored retail center located in Hanover, Maryland within the Baltimore-Washington Corridor. As of December 2015, the property was fully occupied by over 150 tenants, including Bass Pro Shops (7.7% of the net rentable area [NRA]), Cinemark Theatres (6.5% of the NRA) and Burlington Coat Factory (4.9% of the NRA). Bass Pro Shops' lease is scheduled to roll in October 2016, and there has been no update from the servicer at this time regarding the tenant's renewal. Several other tenants, including Burlington Coat Factory, TJ Maxx and Dave and Buster's have renewed their leases in the last seven months. Bass Pro Shops reported $328 psf in sales for YE2015.

The second largest loan (8% of the pool) is secured by a portfolio of 14 suburban office properties located in 11 cities across 11 states. The properties are 100% leased to State Farm Mutual Automobile Insurance Company, and are used as regional operation headquarters. The majority of leases are scheduled to roll in November 2028. None of the individual leases contain termination options, and all are structured with two five-year renewal options.

Green Hills Corporate Center is the third largest loan (5% of the pool) and is secured by a five-building office complex located in Reading, Pennsylvania. The property is essentially fully occupied by two tenants--Penske Truck Leasing (72.1% NRA through December 2020) and Worley Parsons (25.8% NRA through March 2022). Penske is rated 'BBB+' by Fitch (last affirmed October 2015) and operates its headquarters from the property. Worley Parsons has been a tenant since the first phase of the property was developed in 1970.

RATING SENSITIVITIES

The Rating Outlook for all classes remains Stable. Due to the recent issuance of the transaction and stable performance, Fitch does not foresee positive or negative ratings migration until a material economic or asset-level event changes the transaction's portfolio-level metrics. At this time, Fitch has not identified any material changes in the pool's overall performance.

DUE DILIGENCE USAGE

No third party due diligence was provided or reviewed in relation to this rating action.

Fitch has affirmed the following ratings:

--$37.6 million class A-1 at 'AAAsf'; Outlook Stable;

--$132.1 million class A-2 at 'AAAsf'; Outlook Stable;

--$72.3 million class A-SB at 'AAAsf'; Outlook Stable;

--$43.9 million class A-3 at 'AAAsf'; Outlook Stable;

--$250 million class A-4 at 'AAAsf'; Outlook Stable;

--$335.8 million class A-5 at 'AAAsf'; Outlook Stable;

--$69.7 million class A-S at 'AAAsf'; Outlook Stable;

--$941.5 million interest-only class X-A at 'AAAsf'; Outlook Stable;

--$91.8 million class B at 'AA-sf'; Outlook Stable;

--$91.8 million interest-only class X-B at 'AA-sf'; Outlook Stable;

--$47.5 million class C at 'A-sf'; Outlook Stable;

--$0 class PST at 'A-sf'; Outlook Stable;

--$72.8 million class D at 'BBB-sf'; Outlook Stable;

--$28.5 million class E at 'BB-sf'; Outlook Stable.

Fitch does not rate the class F, G, H or the interest-only class X-C certificates. The class A-S, B, and C certificates may be exchanged for class PST certificates and vice versa.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 28 May 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748781

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395

Related Research

Morgan Stanley Bank of America Merrill Lynch Trust, Series 2014-C16 -- Appendix
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=877252

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1004714

Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1004714

Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Contacts

Fitch Ratings
Primary Analyst:
Roxanna Tangen, +1-312-368-3116
Associate Director
Fitch Ratings, Inc.
70 W. Madison
Chicago, IL 60602
or
Committee Chairperson:
R. Brook Sutherland, +1-312-606-2346
Senior Director
or
Media Relations:
Sandro Scenga, +1-212-908-0278
New York
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst:
Roxanna Tangen, +1-312-368-3116
Associate Director
Fitch Ratings, Inc.
70 W. Madison
Chicago, IL 60602
or
Committee Chairperson:
R. Brook Sutherland, +1-312-606-2346
Senior Director
or
Media Relations:
Sandro Scenga, +1-212-908-0278
New York
sandro.scenga@fitchratings.com