DBRS Confirms Ratings of Morgan Stanley Bank of America Merrill Lynch Trust 2014-C14

DBRS, Inc. (DBRS) has today confirmed all classes of Morgan Stanley Bank of America Merrill Lynch Trust 2014-C14 as follows:

-- 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)

All trends are Stable.

The rating confirmations reflect the stable performance of the transaction since issuance in February 2014. The collateral consists of 58 fixed-rate loans secured by 75 commercial and multifamily properties. As of the November 2014 remittance report, the pool has a balance of $1,248.81 million, representing a collateral reduction of 0.4% since issuance.

As of the November 2014 remittance report, there is one loan on the servicer’s watchlist, representing 8.14% of the current pool balance. The John Street loan (Pros#3, 8.14% of the current pool) is secured by the fee interest in a 412-unit, high-rise apartment complex located in the Financial District of Lower Manhattan, New York. The subject offers a diversified unit mix, featuring 157 studios, 224 one-bedroom units and 30 two-bedroom units. In addition to the residential units and amenities, the subject also contains 15,340 square feet of commercial space divided into one office unit and four retail units. This loan was added to the servicer’s watchlist for low a debt service coverage ratio (DSCR) after the Q2 2014 DSCR decreased to 1.20 times (x) with a corresponding occupancy rate of 92% compared with a Q1 2014 DSCR of 1.33x at an occupancy rate of 98%. The reported decline in DSCR is likely a result of annualized reporting based on a few months of financial statements, given the deal closed in February 2014. Per the September 2014 rent roll, the residential units were 93% occupied with an average annual rental rate of $3,247 per unit, and the commercial space was 100% occupied with an average annual rental rate of $41.43 per square foot. The subject is located within the West Village/Downtown submarket of New York. As of the Q3 2014 Reis report, the submarket had an overall apartment vacancy rate of 2.0% and an overall per unit submarket average rent of $4,218.

At issuance, DBRS shadow-rated two loans, representing 6.9% of the current pool balance, as investment grade. DBRS has today confirmed that the performance of this loan remains consistent with investment-grade loan characteristics.

DBRS continues to monitor this transaction in its Monthly CMBS Surveillance Report, with additional information on the DBRS viewpoint for this transaction, including details on the largest loans in the pool. The November 2014 Monthly Surveillance Report for this transaction will be published shortly. If you are interested in receiving this report, contact us at info@dbrs.com.

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.