Fitch to Rate MSBAM 2014-C14 Commercial Mortgage Pass-Through Certificates; Presale Issued
NEW YORK--(BUSINESS WIRE)--Fitch Ratings has issued a presale report on Morgan Stanley Bank of America Merrill Lynch Trust, series 2014-C14 commercial mortgage trust pass-through certificates.
Fitch expects to rate the transaction and assign Outlooks as follows:
--$59,200,000 class A-1 'AAAsf'; Outlook Stable;
--$295,600,000 class A-2 'AAAsf'; Outlook Stable;
--$90,400,000 class A-SB 'AAAsf'; Outlook Stable;
--$173,800,000 class A-3 'AAAsf'; Outlook Stable;
--$100,000,000 class A-4 'AAAsf'; Outlook Stable;
--$316,038,000 class A-5 'AAAsf'; Outlook Stable;
--$1,149,631,000a class X-A 'AAAsf'; Outlook Stable;
--$114,593,000b class A-S 'AAAsf'; Outlook Stable;
--$81,324,000b class B 'AA-sf'; Outlook Stable;
--$264,304,000b class PST 'A-sf'; Outlook Stable;
--$68,387,000b class C 'A-sf'; Outlook Stable;
--$81,324,000ac class X-B 'AA-sf'; Outlook Stable;
--$66,538,000c class D 'BBB-sf'; Outlook Stable;
--$20,331,000c class E 'BB+sf'; Outlook Stable;
--$16,635,000c class F 'BB-sf'; Outlook Stable;
--$12,938,000c class G 'B-sf'; Outlook Stable.
(a) Notional amount and interest only.
(b) Class A-S, class B and class C certificates may be exchanged for class PST certificates, and class PST certificates may be exchanged for class A-S, class B and class C certificates.
(c) Privately placed pursuant to Rule 144A.
The expected ratings are based on information provided by the issuer as of Jan. 17, 2014. Fitch does not expect to rate the $62,841,800 class H or the interest-only class X-C.
The certificates represent the beneficial ownership in the trust, primary assets of which are 58 loans secured by 75 commercial properties having an aggregate principal balance of approximately $1.479 billion as of the cutoff date. The loans were contributed to the trust by Morgan Stanley Mortgage Capital Holdings LLC; Bank of America, National Association; and CIBC Inc.
Fitch reviewed a comprehensive sample of the transaction's collateral, including site inspections on 85.4% of the properties by balance, cash flow analysis of 86.5%, and asset summary reviews on 86.5% of the pool.
KEY RATING DRIVERS
Fitch Leverage: The Fitch stressed debt service coverage ratio (DSCR) and loan to value (LTV) of 1.24x and 104.6%, respectively, represent increased leverage relative to recent Fitch-rated conduit transactions in 2013. Fitch-rated deals that closed in 2013 had average Fitch DSCR and LTV of 1.29x and 101.6%, respectively.
Increased Pool Concentration: The top three loans in the pool represent 26.7% of the total pool balance, which is among the highest concentrations among Fitch-rated transactions between 2012 and 2014. The top 10 loans in the pool represent 55.1% of the total pool balance, which is slightly higher than the 2012 and 2013 average top 10 concentrations of 54.2% and 54.5%, respectively.
Large Hotel and Multifamily Concentration: At 20.8% and 19.1%, respectively, these levels are among the highest hotel and multifamily concentrations for Fitch-rated transaction in 2013 and 2014.
For this transaction, Fitch's net cash flow (NCF) was 9.45% below the most recent reported net operating income (NOI) (for properties that NOI was provided, excluding properties that were stabilizing during this period). Unanticipated further declines in property-level NCF could result in higher defaults and loss severity on defaulted loans and could result in potential rating actions on the certificates. Fitch evaluated the sensitivity of the ratings assigned to MSBAM 2014-C14 certificates and found that the transaction displays average sensitivity to further declines in NCF. In a scenario in which NCF declined a further 10% from Fitch's NCF, a downgrade of the junior 'AAAsf' certificates to 'A+sf' could result. In a scenario in which NCF declined a further 20% from Fitch's NCF, a downgrade of the junior 'AAAsf' certificates to 'BBB+sf' could result. In a more severe scenario, in which NCF declined a further 30% from Fitch's NCF, a downgrade of the junior 'AAAsf' certificates to 'BBB-sf' could result. The presale report includes a detailed explanation of additional stresses and sensitivities.
The master servicer will be Wells Fargo Bank, National Association, rated 'CMS1-' by Fitch. The special servicer will be Rialto Capital Advisors, LLC, rated 'CSS2-' by Fitch.
The presale report is available at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Criteria for Analyzing Multiborrower U.S. Commercial Mortgage Transactions (Aug. 7, 2013);
--Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions (Sept. 20, 2013);
--Global Structured Finance Rating Criteria (June 6, 2012);
--Criteria for Special-Purpose Vehicles in Structured Finance Transactions (May 30, 2012);
--U.S. Commercial Mortgage Servicer Rating Criteria (Feb. 18, 2011);
--U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (Dec. 18, 2012);
--Counterparty Criteria for Structured Finance and Covered Bonds (May 30, 2013).
Applicable Criteria and Related Research: Morgan Stanley Bank of America
Merrill Lynch Trust, Series 2014-C14 (US CMBS)
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
Counterparty Criteria for Structured Finance and Covered Bonds
Criteria for Special-Purpose Vehicles in Structured Finance Transactions
– Effective 13 June 2011 to 30 May 2012
U.S. Commercial Mortgage Servicer Rating Criteria
Criteria for Analyzing Multiborrower U.S. Commercial Mortgage
Criteria for Analyzing Large Loans in U.S. Commercial Mortgage
Global Structured Finance Rating Criteria