CHICAGO--(BUSINESS WIRE)--Fitch Ratings has issued a presale report on COMM 2014-SAVA Mortgage Trust 2013 commercial mortgage pass-through certificates.
Fitch expects to rate the transaction and assign Rating Outlooks as follows:
--$260,000,000 class A 'AAAsf'; Outlook Stable;
--$438,829,788* class X-CP 'NR';
--$550,000,000* class X-EXT 'NR';
--$98,544,000 class B 'NR';
--$114,455,000 class C 'NR';
--$70,001,000 class D 'NR'.
*Interest only and notional amount
The expected ratings are based upon information received by the issuer as of June 20, 2014.
The certificates in this transaction represent the beneficial interests in a trust that holds a two-year floating-rate mortgage loan secured by 167 skilled nursing facilities located in 19 states across the U.S. The loan is sponsored by Rubin Schron.
KEY RATING DRIVERS
Leverage Metrics: The $550 million loan has a Fitch debt service coverage ratio (DSCR) of 1.67x and a debt per bed of $27,168.
Additional Debt: In addition to the trust debt there is a $150 million B-note as well as $240 million in mezzanine debt. At the operator level there is a $125 million working capital facility secured by accounts receivable. There are also approximately $216 million in inter-company and other notes which are fully subordinate to the mortgages.
Operational Aspects of Skilled Nursing: The portfolio is comprised of 100% skilled nursing properties which have higher operational risk factors than other property types. The stress applied in Fitch's net cash flow (NCF) and the application of conservative DSCR and loan to value (LTV) attachment points address the operational risk associated with the portfolio.
Diverse Portfolio: The portfolio exhibits geographic diversity across primary and secondary markets in 29 states. The largest state exposure is North Carolina with 27 facilities representing 21.1% by allocated loan balance. No single facility contributes more than 2% of NCF.
Property Age and Condition: The properties are older and were constructed between 1928 and 2001 with the average property being built in 1973. Fitch considers the properties to be in overall fair condition with 77.2% of the properties by allocated loan balance receiving a Fitch property quality score of B- or below. Fitch observed a wide disparity in property quality, maintenance and staff engagement across the portfolio.
Fitch found that the pool could withstand a 81.3% decline in appraised value and an approximately 86.3% decrease in the Fitch NCF prior to experiencing $1 of loss to any 'AAAsf' rated class.
Fitch evaluated the sensitivity of the ratings of class A (rated 'AAAsf' by Fitch) and found that a 7.9% decline in Fitch NCF would result in a one category downgrade, while a 42.7% decline would result in a downgrade to below investment grade. The Rating Sensitivity section in the presale report includes a detailed explanation of additional stresses and sensitivities.
Key Rating Drivers and Rating Sensitivities are further described in the accompanying presale report. The presale report is available to all investors on Fitch's web site 'www.fitchratings.com'.
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 (September 2013);
--'Criteria for Special-Purpose Vehicles in Structured Finance Transactions' (May 2014);
--Counterparty Criteria for Structured Finance Transactions and Covered Bonds (May 2014);
--U.S. Commercial Mortgage Servicer Rating Criteria, (February 2014);
--COMM 2014-SAVA - Appendix, (June 2014).
Applicable Criteria and Related Research: COMM 2014-SAVA (US CMBS)
Global Structured Finance Rating Criteria
Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions
Counterparty Criteria for Structured Finance and Covered Bonds
Rating Criteria for U.S. Commercial Mortgage Servicers