DBRS Confirms Ratings of Morgan Stanley Bank of America Merrill Lynch Trust 2014-C19, Stable Trends

DBRS Limited (DBRS) has today confirmed the ratings for all classes of Commercial Mortgage Pass-Through Certificates, Series 2014-C19 (the Certificates) issued by Morgan Stanley Bank of America Merrill Lynch Trust 2014-C19 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-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class X-C at AAA (sf)
-- Class X-D at AAA (sf)
-- Class X-E at AAA (sf)
-- Class X-F at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (low) (sf)
-- Class PST at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (low) (sf)
-- Class F at B (low) (sf)

All trends are Stable. DBRS does not rate the first loss piece, Class G.

The rating confirmations reflect that the transaction’s current performance remains stable. The collateral consists of 77 fixed-rate loans secured by 93 commercial properties. As of the November 2016 remittance, all 77 loans remain in the pool, with an aggregate outstanding principal balance of approximately $1.46 billion, representing a collateral reduction of 1.0% since issuance due to scheduled loan amortization. The pool is concentrated with loans secured by office properties (34.7% of the pool), but there is also a concentration of retail (24.6% of the pool), multifamily (17.3% of the pool) and hotel (16.7% of the pool) property types. Seven loans (20.6% of the pool) are structured with full interest-only (IO) terms, while an additional 23 loans (48.2% of the pool) have partial IO periods remaining, ranging from four months to 48 months. To date, 72 loans (96.9% of the pool) have reported partial-year 2016 net cash flow (NCF) figures and two loans (2.7% of the pool) have reported YE2015 NCFs, while the remaining loan (0.2% of the pool) has not yet reported any financials. According to the YE2015 NCFs, the transaction had a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 1.75 times (x) and 9.4%, respectively, compared with the DBRS UW figures of 1.58x and 8.6%, respectively.

Based on the most recent cash flow reporting (ranging from YE2015 through partial-year 2016 financials), the Top 15 loans reported a WA DSCR of 1.74x, compared with the DBRS UW figure of 1.62x, reflective of a WA amortizing net cash flow (NCF) growth of 11.0%. There are four loans (12.0% of the pool) in the Top 15 exhibiting NCF declines compared with the DBRS UW figures, with declines ranging from 0.9% to 42.9%. These four loans include the One & Only Ocean Club (3.8% of the pool), PacStar Retail Portfolio (3.4% of the pool), Chandler AZ Hospitality Portfolio (2.5% of the pool) and Park at Caldera (2.4% of the pool). Based on the most recent cash flow reporting (ranging from YE2015 through partial-year 2016 financials) for these loans, the WA amortizing DSCR was 1.14x, compared with the DBRS UW figure of 1.44x, which reflects a WA NCF decline of 21.3%. The largest of these loans, the One & Only Ocean Club, is secured by a 105-key, full-service, beachfront hotel located on the Paradise Islands in Nassau, Bahamas. In mid-2015, the Hartford Wing (50 units) was taken offline in order to complete an approximately $7.0 million renovation in which all guest rooms and suites were given a complete redesign, in addition to a new beachfront infinity-edge pool and ocean grill. In October 2016, Hurricane Matthew swept through the Bahamas, hitting the resort. Per servicer commentary, the borrower estimates that damages (exterior, roof and the restaurant) sustained during the hurricane could total as much as $15.0 million. It has been confirmed that the resort is temporarily closed; however, reservations are being taken beginning February 14, 2017.

As of the November 2016 remittance, there are no loans in special servicing and ten loans (10.5% of the pool) on the servicer’s watchlist. Two of these loans (0.6% of the pool) were flagged as a result of deferred maintenance, while one loan (0.2% of the pool) was flagged because of near-term tenant rollover. The remaining seven loans (9.7% of the pool) were placed on the servicer’s watchlist because of performance-related reasons. Based on the most recent cash flow reporting (ranging from YE2015 through partial-year 2016 financials), these seven loans reported a WA DSCR of 0.93x, compared to the DBRS UW figure of 1.49x, reflective of a WA amortizing NCF decline of 36.8%.

At issuance, DBRS assigned an investment-grade shadow rating to one loan, 300 North LaSalle (Prospectus ID#2, 8.9% of the pool). DBRS has today confirmed that the performance of this loan remains consistent with investment-grade loan characteristics.

DBRS has provided updated loan-level commentary and analysis for larger and/or pivotal watchlisted and specially serviced loans, as well as for the largest 15 loans in the pool, in the DBRS CMBS IReports platform. To view these and future loan-level updates provided as part of DBRS’s ongoing surveillance for this transaction, please log into DBRS CMBS IReports at www.ireports.dbrs.com.

For more information on these rating actions, please 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 methodologies are North American CMBS Rating Methodology (March 2016) and CMBS North American Surveillance (December 2016), which can be found on our website under Methodologies.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.