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

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

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

The trends on all classes are Stable, excluding Class G, to which DBRS maintained a Negative trend because of ongoing concerns surrounding the Clearwater Suites loan (Prospectus ID#, 3.5% of the current pool balance), which is secured by a hotel property located in Fort McMurray, Alberta and has been reporting depressed cash flows since YE2015. The loan is current and is on the servicer’s watchlist for a low DSCR.

At issuance, the collateral consisted of 37 fixed-rate loans secured by 41 commercial and multifamily properties. As of the July 2017 remittance, 35 of the original 37 loans remained in the pool, with an outstanding principal balance of approximately $257 million, representing a collateral reduction of approximately 9.4% since issuance because of scheduled amortization and two loans repaid at maturity. Overall, performance metrics have remained stable since issuance, with a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 1.43 times (x) and 10.1%, respectively, for the pool as based on the most recent year-end figures reported for the 35 loans reporting as of the July 2017 remittance. These figures compare with the DBRS Term DSCR and DBRS Term Debt Yield at issuances of 1.39x and 9.3%, respectively, for the same 35 loans. There are currently no loans in special servicing.

As of the July 2017 remittance report, there are six loans, representing 20.0% of the current pool, on the servicer’s watchlist. The largest watchlisted loan, Burlington Office Portfolio (Prospectus ID #3, 6.7% of the pool) was watchlisted due to a low YE2016 DSCR of 1.04x (odd FYE month of May). Cash flows were down for the period due to an increase in vacancy; however, the servicer inspected all three properties in June 2017 and found the overall portfolio occupancy to be 99.4% occupied, suggesting cash flows should rebound in the near term.

The ratings assigned to Class X materially deviate from the lower rating implied by the quantitative results. The deviation is warranted because consideration was given actual loan, transaction and sector performance where a rating based on the lowest rated notional class may not reflect the observed risk.

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

Notes:
All figures are in Canadian dollars unless otherwise noted.

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

The principal methodology is CMBS North American Surveillance (March 2017), which can be found on dbrs.com under Methodologies.

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