DBRS Confirms All Classes of Real Estate Asset Liquidity Trust, Series 2014-1

DBRS Limited (DBRS) confirmed the ratings on the following Commercial Mortgage Pass-Through Certificates, Series 2014-1 issued by Real Estate Asset Liquidity Trust, Series 2014-1:

-- Class A 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)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance. At issuance, the pool consisted of 34 loans secured by 46 properties with a trust balance of $280.6 million. As of the August 2018 remittance, the pool has a current trust balance of $255.3 million, representing a collateral reduction of 9.0% due to scheduled loan amortization with all loans remaining in the pool. Based on the most recent reporting, the pool is reporting a weighted-average (WA) debt service coverage ratio (DSCR) of 1.49 times (x) and 10.1%, respectively, compared with the DBRS WA DSCR and debt yield of 1.46x and 8.9%, respectively, at issuance. Based on the most recent reporting, the Top 15 loans (excluding defeasance) are reporting a WA DSCR and debt yield of 1.54x and 10.5%, respectively, representing a net cash flow (NCF) growth of 9.2% over DBRS NCF figures at issuance. Twenty-two loans (69.4% of the pool) have partial or full recourse to their respective sponsors and 26 loans (89.5% of the pool) are secured by properties in urban or suburban markets. The pool benefits from defeasance collateral as one loan (Prospectus ID#13; 3.1% of the pool) is fully defeased.

According to the August 2018 remittance, there are three loans (3.8% of the pool) on the servicer’s watchlist and no loans in special servicing. Four Points Sheraton Kamloops (Prospectus ID#14; 2.7% of the pool) was added to the servicer’s watchlist in July 2016 for declining cash flow performance since issuance. Increased competition in the submarket hindered the subject’s performance until September 2017; however, occupancy has increased to near-issuance levels as of May 2018 reporting. The subject’s franchise agreement with Clocktower Hotel Limited Partnership expires in July 2020 and the loan is full recourse to the sponsor. Magnum Building Edmonton (Prospectus ID#31; 0.6% of the pool) and Whitestone Manor Multi-Residence Edmonton (Prospectus ID#34; 0.5% of the pool) were added to the servicer’s watchlist due to rollover and declining cash flow performance, respectively.

Class X is an interest-only (IO) certificate that references multiple rated tranches. The IO rating mirrors the lowest-rated applicable reference obligation tranche.

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:

-- Sheraton Cavalier (Prospectus ID#5; 5.7% of the pool)
-- Four Points Sheraton Kamloops (Prospectus ID#14; 2.7% of pool)
-- Strongco Building Fort McMurray (Prospectus ID#9; 4.4% of pool)
-- Magnum Building Edmonton (Prospectus ID#31; 0.6% of pool)

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 CMBS universe as well as deal and loan-level commentary for all DBRS-rated transactions.

Notes:
All figures are in Canadian 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.