DBRS Upgrades Four Classes of ReadyCap Commercial Mortgage Trust 2014-1

DBRS Limited (DBRS) upgraded the ratings on the following classes of ReadyCap Commercial Mortgage Trust 2014-1 Commercial Mortgage Pass-Through Certificates issued by ReadyCap Commercial Mortgage Trust 2014-1:

-- Class C to AAA (sf) from AA (sf)
-- Class D to AA (low) (sf) from A (high) (sf)
-- Class E to A (low) (sf) from BBB (low) (sf)
-- Class F to BB (high) (sf) from BB (low) (sf)

DBRS also confirmed the ratings on the following classes:

-- Class A at AAA (sf)
-- Class B at AAA (sf)
-- Class IO-A at AAA (sf)

All trends are Stable.

The rating upgrades reflect the overall credit support to the bonds as a result of significant collateral reduction due to successful loan repayment as well as the overall stable performance of the remaining collateral. As of the September 2018 remittance, there has been a total collateral reduction of 67.7%, with 27 of the original 71 loans remaining in the pool. To date, 96.0% of the pool balance is reporting YE2017 financials, with a weighted-average (WA) debt service coverage ratio (DSCR) and debt yield of 1.57 times (x) and 12.7%, respectively. This compares favourably with the DBRS Term figures at issuance of 1.41x and 10.7%, respectively. The top 15 loans continue to exhibit stable performance, with a WA DSCR and debt yield of 1.61x and 13.0%, respectively, representing a WA net cash flow (NCF) growth of 21.0% over the DBRS issuance NCF figures.

There are nine loans, representing 18.9% of the pool, including two in the top 15, that are on the servicer’s watchlist. These loans are reporting a WA DSCR of 0.93x and WA debt yield of 7.6%. Seven of the nine loans on the watchlist are multifamily properties that have experienced cash flow and occupancy declines since issuance. The remaining two watchlisted loans were flagged due to an upcoming maturity date and cash flow decline driven by higher operating expenses.

Class IO-A is an interest-only (IO) certificate that references 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:

-- Pros. ID#43 – 7200 Hull Street Road
-- Pros. ID#4 – Gaslamp San Diego
-- Pros. ID#9 – 1820 West Webster Avenue
-- Pros. ID#60 – Kensington Square

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:
The principal methodology is the North American CMBS Surveillance Methodology, 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.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

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