DBRS Finalizes Provisional Ratings on CMLS Issuer Corp., Series 2014-1

DBRS Limited (DBRS) has today finalized provisional ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2014-1 (the Certificates) issued by CMLS Issuer Corp., Series 2014-1:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (sf)
-- Class D at BBB (sf)
-- Class E at BBB (low) (sf)
-- Class F at BB (sf)
-- Class G at B (sf)
-- Class X at AAA (sf)

Class X is notional. DBRS ratings on interest-only (IO) certificates address the likelihood of receiving interest based on the notional amount outstanding. DBRS considers the IO certificates’ position within the transaction payment waterfall when determining the appropriate rating.

The collateral for the transaction consists of 37 fixed-rate loans secured by 41 properties. All 37 loans in the transaction amortize for the entire term, with the majority of the pool (78.0%) by loan balance amortizing on a 25-year or less amortization schedule (65.9% have between 20 years and 25 years of remaining amortization) and 22.0% of the pool by loan balance having longer than 25-year amortization schedules. Twenty-five loans (61.4% of the pool by loan balance) offer meaningful recourse to the respective sponsor; all else equal, recourse loans typically have lower probability of default and were modeled as such.

The conduit pool was analyzed to determine the provisional ratings, reflecting the long-term probability of loan default within the term and its liquidity at maturity. When the cut-off loan balances were measured against the DBRS Stabilized Net Cash Flow and their respective actual constants, DBRS identified a small portion of the pool as having a higher likelihood of mid-term default. Two loans, representing 2.64% of the pool, have a DBRS Term Debt Service Coverage Ratio (DSCR) below 1.15 times (x). In addition, 11.6% of the pool by loan balance have DBRS Refinance DSCRs below 1.00x. The DBRS weighted-average (WA) Term DSCR and Going-In Debt Yield are 1.39x and 9.3%, respectively. The DBRS WA Exit Debt Yield is 12.2%.

DBRS sampled 23 loans, representing 83.2% of the pool by loan balance, and site inspections were performed on 25 properties, representing 78.7% of the pool by loan allocated balance. Of the sampled loans, two loans were considered to be of Excellent property quality rating, and four loans were given an Above Average property quality rating.

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:
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 Related Research or by contacting us at info@dbrs.com.

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

The applicable methodology is CMBS Rating Methodology (January 2012), which can be found on our website under Methodologies.

The full report providing additional analytical detail is available by clicking on the link below or by contacting us at info@dbrs.com.