CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed the ratings of New York Housing Development Corporation multi-family mortgage revenue bonds, series 2014 (BAMLL 2014-8SPR). A complete list of rating actions follows at the end of this release.
KEY RATING DRIVERS
Stable Performance: The affirmations are based on overall stable performance since issuance. Based on full-year 2015 financial statements, Fitch net cash flow was stable at $35.5 million compared with $36.5 million at issuance. The slight decrease in Fitch cash flow is primarily the result of an increase in expenses, most of which were administrative expenses. The increase is the result of the borrower Forest City's REIT conversion, which is discussed below. Fitch requested details on whether the increased expenses are one-time or ongoing; however, a response from the master servicer was not provided via the 17g5 provider.
Trophy Multifamily Collateral in Prime Manhattan Location: The New York City Housing Development corporation multi-family mortgage revenue bonds (8 Spruce Street), series 2014 represent the beneficial interests in the mortgage loan securing the fee interest in and associated rents from New York by Gehry located at 8 Spruce Street, New York, NY. Collateral for the loan includes the residential component located on floors 7-76 inclusive of 899-units; the multi-family amenities located on floors 6-8; and a small retail location on the ground floor. The property was completed in 2011 and designed by architect Frank Gehry.
Strong Initial Leasing Momentum and Stable Occupancy: A rent roll from YE 2015 shows occupancy stable at 98% compared with 99% at issuance.
Institutional Sponsorship and Property Management: The sponsorship includes Forest City Enterprises, Inc., Teachers Insurance and Annuity Association (TIAA) and National Real Estate Advisors (NREA). Forest City's multifamily portfolio includes over 25,500 units contained within 77 properties throughout the U.S. Since Fitch's last rating action, Forest City completed its conversion to a REIT. As a result of the conversion, the management agreements pertaining to certain of the complex's components were assigned to a new wholly owned subsidiary of the borrower's parent. The only collateral of the CMBS loan affected is the fitness facility. The change does not affect ownership or management of the broader property.
The issuance includes $346.1 million of taxable bonds (classes A, B, and C) and $203.9 million of tax exempt bonds (classes D, E, and F). The property is subject to a regulatory agreement with the issuer, New York City Housing Development Corp., requiring, among other things, the property to preserve the tax-exempt status of the bonds, preservation of the 421-a real estate tax abatement and that all units continue to be subject to the New York City Rent Stabilization Law.
The loan was originated by the New York City Housing Development Corporation and underwritten by Merrill Lynch, Pierce, Fenner & Smith Inc. (Bank of America Merrill Lynch), Barclays and Citigroup.
RATING SENSITIVITIES
The Stable Rating Outlooks indicate that rating changes are unlikely over the next one to two years as performance is expected to remain stable. The loan is interest-only until the anticipated repayment date in 2024, therefore upgrades are unlikely unless performance improves significantly. Should occupancy or portfolio cash flow deteriorate materially, downgrades are possible.
USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10
No third-party due diligence was provided or reviewed in relation to this rating action.
Fitch has affirmed the following class:
--$276.9 million class A at 'AAAsf'; Outlook Stable.
Fitch does not rate classes B, C, D, E, and F.
Additional information is available at www.fitchratings.com
Applicable Criteria
Counterparty Criteria for Structured Finance and Covered Bonds (pub. 01 Sep 2016)
https://www.fitchratings.com/site/re/886006
Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions (pub. 18 Aug 2016)
https://www.fitchratings.com/site/re/885802
Global Structured Finance Rating Criteria (pub. 27 Jun 2016)
https://www.fitchratings.com/site/re/883130
Related Research
New York City Housing Development Corporation Multi-Family Mortgage Revenue Bonds, Series 2014 (8 Spruce Street) -- Appendix
https://www.fitchratings.com/site/re/791108
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1013381
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1013381
Endorsement Policy
https://www.fitchratings.com/regulatory
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTPS://WWW.FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT 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.
Copyright © 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch's factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch's ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed.
The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers.
For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001.