DBRS Assigns Provisional Ratings to Morgan Stanley Bank of America Merrill Lynch Trust 2014-C14

DBRS has today assigned provisional ratings to the following classes of Commercial Mortgage Pass-Through Certificates, Series 2014-C14 (the Certificates), to be issued by Morgan Stanley Bank of America Merrill Lynch Trust 2014-C14. The trends are Stable.

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-5 at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class X-C at AAA (sf)
-- Class A-S at AAA (sf)
-- Class B at AA (sf)
-- Class PST at A (low) (sf)
-- Class C at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (high) (sf)
-- Class F at BB (sf)
-- Class G at B (high) (sf)

Classes X-B, X-C, D, E, F and G have been privately placed pursuant to Rule 144A.

The Classes X-A, X-B and X-C balances are notional. DBRS ratings on interest-only certificates address the likelihood of receiving interest based on the notional amount outstanding. DBRS considers the interest-only certificates’ position within the transaction payment waterfall when determining the appropriate rating.

Up to the full certificate balance of the Class A-S, Class B and Class C certificates may be exchanged for Class PST certificates. Class PST certificates may be exchanged for up to the full certificate balance of the Class A-S, Class B and Class C certificates.

The collateral consists of 58 fixed-rate loans secured by 75 commercial and multifamily properties. The transaction has a balance of $1,478,625,800. The pool consists of relatively moderate-leverage financing, with a DBRS weighted-average refinance debt service coverage ratio of 1.15 times, based on a weighted-average stressed refinance constant of 9.6%. The DBRS sample included 30 loans, representing 83.9% of the pool. Of the sampled loans, one loan in the top ten was given Excellent property quality, five loans (three of which are in the top ten) were given Above Average property quality and no loans were given Below Average property quality. DBRS considers the pool to be concentrated based on loan size, with a concentration profile equivalent to a pool of 23.5 equal-sized loans. Additionally, two loans (one of which is in the top ten), representing 6.9% of the pool, were shadow-rated investment grade.

Eleven hotel properties secure 20.8% of the allocated loan balance of the pool, a relatively high concentration, four of which are in the top ten. Hotel properties have higher cash flow volatility than traditional property types, as their income, which is derived from daily contracts rather than multi-year leases, and their expenses, which are often mostly fixed, are quite high as a percentage of revenue. These two factors cause revenue to fall swiftly during a downturn and cash flow to fall even faster, because of the high operating leverage.

The ratings assigned to the Certificates by DBRS are based exclusively on the credit provided by the transaction structure and underlying trust assets. All classes will be subject to ongoing surveillance, which could result in upgrades or downgrades by DBRS after the date of issuance.

Notes:
All figures are in U.S. dollars unless otherwise noted.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodology is CMBS Rating Methodology, which can be found on our website under Methodologies.

The Rule 17g-7 Report of Representations and Warranties is hereby incorporated by reference and can be found by clicking on the link to the right under Other Research or by contacting us at info@dbrs.com.