DBRS Assigns Provisional Ratings to Morgan Stanley Bank of America Merrill Lynch Trust 2014-C15

DBRS has today assigned provisional ratings to the following classes of Commercial Mortgage Pass-Through Certificates, Series 2014-C15 (the Certificates), to be issued by Morgan Stanley Bank of America Merrill Lynch Trust 2014-C15. 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 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 (high) (sf)
-- Class C at A (high) (sf)
-- Class D at BBB (sf)
-- Class E at BBB (low) (sf)
-- Class F at BB (sf)
-- Class G at BB (low) (sf)
-- Class H at B (low) (sf)

Classes X-B, X-C, D, E, F, G, H, and J will be 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 48 fixed-rate loans secured by 76 commercial and multifamily properties. The transaction has a balance of $1,079,759,197. The pool consists of relatively moderate-leverage financing, with a weighted-average DBRS Refi DSCR of 1.20 times, based on a weighted-average stressed refinance constant of 9.9%. The DBRS sample included 24 loans, representing 83.9% of the pool. Of the sampled loans, one loan in the top ten was given Excellent property quality, four loans 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 15.8 equal-sized loans. Two loans, both within the top ten and representing a combined 13.9% of the pool, were shadow-rated investment grade.

Four hotel properties secure 22.5% of the allocated loan balance of the pool, a relatively high concentration, all 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.