DBRS Confirms All Classes of Morgan Stanley Bank of America Merrill Lynch Trust 2014-C18

DBRS Limited (DBRS) confirmed the ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2014-C18 issued by Morgan Stanley Bank of America Merril Lynch Trust 2014-C18 as follows:

-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-S at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class X-A at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (low) (sf)
-- Class PST at A (low) (sf)
-- Class X-B at BBB (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (low) (sf)
-- Class X-C at B (sf)
-- Class F at B (low) (sf)

DBRS does not rate Class G, the first-loss piece. The Class A-S, Class B and Class C certificates may be exchanged for the Class PST certificates (and vice versa). All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance. At issuance, the transaction had an original trust balance of $1,033 million and consisted of 65 fixed rated loans secured by 100 properties. As of the July 2018 remittance, there are 61 loans remaining in the pool secured by 96 properties with a current trust balance of $984.2 million. The trust has experienced a collateral reduction of 4.9% since issuance due to scheduled loan amortization and the repayment of four loans. Three loans, representing 2.58% of the pool balance, are fully defeased. All but five loans in the pool reported YE2017 financials, reporting a weighted-average (WA) debt service coverage ratio (DSCR) and debt yield of 1.74 times (x) and 10.1%, respectively, compared to the DBRS term figures of 1.64x and 9.4% at issuance.

The pool has benefited from stable cash flow performance. Based on the most recent financials, the top 15 loans (64.4% of the pool) reported a WA DSCR of 1.66x, compared with the WA DBRS Term DSCR of 1.50x, representing a WA net cash flow (NCF) growth of 16.0%. The WA debt yield for the top 15 loans increased to 9.3% from the WA DBRS debt yield of 8.2%.

As of the July 2018 remittance, there is one loan in special servicing, representing 1.9% of the current pool balance and eight loans are on the servicer’s watchlist, representing 12.9% of the current pool balance. The loan in special servicing, Value Place Williston (Prospectus ID#14), is secured by a limited-service hotel located in Williston, North Dakota. The loan transferred to special servicing for payment default in October 2015. The servicer noted that it plans to foreclose or resolve the loan by the end of the year. DBRS assumed a liquidation scenario for the loan with this review. For additional information on this loan, please see the DBRS Viewpoint platform, for which information is provided below.

Two loans in the top 15 are on the servicer’s watchlist. The larger of the two, Huntington Oaks Shopping Center (Prospectus ID#3, 5.9% of the pool), is secured by an anchored retail center in Monrovia, California. The loan, added to the watchlist in April 2018 as Toys “R” Us (13.0% of net rentable area, expiring Janaury 2023), filed for bankruptcy and has officially closed. The servicer has stated that the loan entered a cash flow sweep period because of the Toys “R” Us closure. DBRS assumed a stressed scenario for the loan with this review to increase the probability of default.

At issuance, DBRS shadow rated 300 North LaSalle (Prospectus ID#2, 9.7% of the pool) as investment grade. With this review, DBRS confirms that the performance of this loan remains consistent with the investment-grade characteristics.

Classes X-A, X-B, X-C and X-D are interest-only (IO) certificates that reference a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated applicable reference obligation tranche adjusted upward by one notch if senior in the waterfall.

All ratings will be subject to ongoing surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed or discontinued by DBRS.

As part of this review, DBRS has provided updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Prospectus ID#1 – TKG Retail Portfolio
-- Prospectus ID#2 – 300 North Lasalle
-- Prospectus ID#3 – Huntington Oaks Shopping Center
-- Prospectus ID#6 – 250 Munoz Rivera
-- Prospectus ID#7 – Avion Business Park Portfolio
-- Prospectus ID#11 – Louisiana and Mississippi Retail Portfolio
-- Prospectus ID#14 - Value Place Williston
-- Prospectus ID#38 - Keystone Office Park

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrs.com. The platform includes issuer and servicer data for the entire commercial mortgage-backed securities universe, as well as deal and loan-level commentary for all DBRS rated transactions.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is CMBS North American Surveillance, which can be found on dbrs.com under Methodologies. For a list of the Structured Finance related methodologies that may be used during the rating process, please see the DBRS Global Structured Finance Related Methodologies document on www.dbrs.com. Please note that not every related methodology listed under a principal Structured Finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info@dbrs.com.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

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