DBRS Confirms All Classes of Morgan Stanley Bank of America Merrill Lynch Trust 2014-C17

DBRS Limited (DBRS) confirmed the ratings of the Commercial Mortgage Pass-Through Certificates, Series 2014-C17 issued by Morgan Stanley Bank of America Merrill Lynch Trust 2014-C17 as follows:

-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-5 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 (low) (sf)
-- Class X-B at A (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 X-C at B (high) (sf)
-- Class F at B (sf)

The Class PST certificates are exchangeable for the Class A-S, Class B and Class C certificates (and vice versa).

All trends are Stable.

In addition, due to investor request, DBRS provided a European Union (EU) endorsement for Class D. The transaction was last reviewed in July 2018, when all classes were confirmed with Stable trends. This review confirms that as of the December 2018 remittance, there have been no material changes to this transaction since the previous review, thereby supporting the rating confirmations.

The rating confirmations reflect the overall stable performance of the transaction, which has had a collateral reduction of 6.2% since issuance, with 66 of the original 67 loans remaining in the pool as of the December 2018 remittance report. The majority of the remaining loans in the pool were structured with ten-year terms and will mature in 2024. Five loans, including one loan in the top 15, are fully defeased, representing 10.4% of the pool. Loans representing 81.3% of the pool reported year-end (YE) 2017 financials with a weighted-average (WA) debt-service coverage ratio (DSCR) and debt yield of 1.71 times (x) and 10.4%, respectively. The largest 15 loans reported YE2017 financials with a WA DSCR and WA debt yield of 1.64x and 9.9%, respectively, representing a WA cash flow improvement of 10.2% over the DBRS net cash flow figures derived at issuance.

As of the December 2018 remittance, there are 12 loans (including four in the top 15), representing 19.3% of the pool, on the servicer’s watchlist. Five of these loans, representing 4.4% of the pool, were also on the servicer’s watchlist at the time of the July 2018 review. Three loans are being monitored for deferred maintenance, while the remaining nine loans are being monitored for major tenant lease expirations, occupancy related issues and cash flow declines. The largest loan added to the watchlist since July, Aspen Heights Statesboro (Prospectus ID#4, 5.0% of the pool), is being monitored for a low annualized Q2 2018 DSCR of 0.84x, driven primarily by higher operating expenses. Additionally, since the last review, there was one loan, Polo Plaza (Prospectus ID#28, 1.1% of the pool), that has been fully defeased.

There is one loan, representing 1.9% of the pool, in special servicing. The Holiday Inn Houston Intercontinental Airport (Prospectus ID#17) loan, which is secured by a 414-key full-service hotel located in Houston, was transferred to special servicing in March 2017 due to imminent default and the property has since become real estate owned. According to the servicer, the subject has property improvement plan renovations due to be completed in 2015 that remain outstanding and are putting the property in violation of the franchise agreement. In May 2017, the ten-year franchise agreement with Holiday Inn expired; however, the hotel is still listed as a Holiday Inn on its website as of December 2018. DBRS assumed a loss severity approaching 42% based on the most recent as-is appraised value of $16.1 million as of May 2018 for this review but acknowledges the loss severity could go much higher given the market conditions. For additional information on this loan, please see the loan commentary on the DBRS Viewpoint platform, for which information is provided below.

Classes X-A, X-B and X-C 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.

For additional information on the pivotal loans in the transaction, including the larger loans on the watchlist and the loan in special servicing, please see the DBRS loan commentary in DBRS Viewpoint. 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 (CMBS) 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 North American CMBS Surveillance, which can be found on dbrs.com under Methodologies & Criteria. 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 rating on Class D is endorsed by DBRS Ratings Limited for use in the European Union.

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.