DBRS Morningstar Confirms All Classes of Morgan Stanley Bank of America Merrill Lynch Trust 2014-C15

DBRS Limited (DBRS Morningstar) confirmed the ratings on all classes of the Commercial Mortgage Pass-Through Certificates, Series 2014-C15 issued by Morgan Stanley Bank of America Merrill Lynch Trust 2014-C15 as follows:

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

All trends are Stable.

The ratings confirmations reflect the overall stable performance of the transaction since the last review. At issuance, the trust comprised 48 loans secured by 76 commercial and multifamily properties with a trust balance of $1.08 billion. Per the December 2021 remittance report, 38 loans remain with an outstanding pool balance of $838.3 million, representing a collateral reduction of 22.4% since issuance. Eight loans, representing 10.8% of the current outstanding balance, have been fully defeased. The pool is concentrated by loan size as the largest loan, Arundel Mills & Marketplace (Prospectus ID#1), comprises 17.8% of the trust balance and the five largest loans comprise 55.6% of the trust balance. The transaction is concentrated by property type as well as loans secured by retail properties and hospitality properties collectively total more than 70% of the remaining trust balance.

One loan, representing 0.4% of the outstanding balance, is specially serviced. Eight loans, representing 27.0% of the outstanding pool balance, are on servicer’s watchlist with most loans exhibiting low debt service coverage ratios (DSCR) during the Coronavirus Disease (COVID-19) pandemic.

The largest loan on the servicer’s watchlist is La Concha Hotel and Tower (Prospectus ID#3, 8.9% of the pool). It is secured by the borrower's fee and leasehold interest in a 248-room, full-service hotel building, and the fee interest in the 235-suite La Concha Tower in the Condado District of San Juan, Puerto Rico. The property is spread across 4.4 acres and has four restaurants, 30,000 square feet (sf) of meeting space, and the 17,000-sf Casino Del Mar. The loan was added to servicer’s watchlist in September 2020 because of a decline in DSCR, which has fallen negative as of the YE2020 financials. The most recent DSCR, based on the trailing 12 months (T-12) ended June 30, 2021, is now positive but remains below breakeven at 0.62 times (x). Per the STR, Inc. report for September 2021, the property’s values for occupancy, average daily rate (ADR), and revenue per available room (RevPAR) for the trailing three months (T-3) ended September 30, 2021, were 63.3%, $312.92, and $198.03, respectively, while its competitive set’s values were 66.8%, $277.50, and $185.45, respectively. The loan is under cash management with reserves totaling $14.8 million, per the December 2021 remittance report.

The second-largest loan on the servicer’s watchlist is Marriott Philadelphia Downtown (Prospectus ID#5; 7.3% of the pool). It is secured by the fee simple interest in a 1,408 key full-service Marriott hotel located in the Center City District of Philadelphia. The property is the only hotel with direct access to the Pennsylvania Convention Center and the convention business is a significant demand driver for the subject. The loan was added to the servicer’s watchlist in September 2020 because of a low DSCR, which was reported at -0.07x with an occupancy rate of 63%. Per the financials for the T-12 ended June 30, 2021, the subject’s occupancy rate was 10.1% while the DSCR was -0.92x. Per the STR, Inc. report for September 2021, occupancy, ADR, and RevPAR at the subject property for the T-3 ended September 30, 2021, stood at 32.5%, $179.16, and $58.28, respectively, while these figures at the competitive set of hotels were reported at 45.5%, $171.42, and $77.47, respectively. The loan was far outperforming the issuer’s net cash flow as recently as 2019 and, given its location, it’s likely to rebound, although that rebound may take longer to manifest itself, given the property’s reliance on business and convention bookings.

At issuance, DBRS Morningstar shadow-rated the Arundel Mills & Marketplace and JW Marriott and Fairfield Inn & Suites loans (Prospectus ID#7; 5.7% of the pool) investment grade. With this review, DBRS Morningstar confirms that the performance of these loans remains consistent with investment-grade loan characteristics.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

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 are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by DBRS Morningstar.

DBRS Morningstar provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Prospectus ID#3 – La Concha Hotel and Tower (8.9% of the pool).
-- Prospectus ID#5 – Marriott Philadelphia Downtown (7.3% of the pool)
-- Prospectus ID#7 – JW Marriott and Fairfield Inn & Suites (5.7% of the pool)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com. The platform includes issuer and servicer data for most outstanding CMBS transactions (including non-DBRS Morningstar rated), as well as loan-level and transaction-level commentary for most DBRS Morningstar-rated and -monitored transactions.

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

The principal methodology is the North American CMBS Surveillance Methodology (March 26, 2021), which can be found on dbrsmorningstar.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 Morningstar Global Structured Finance Related Methodologies document, which can be found on dbrsmorningstar.com in the Commentary tab under Regulatory Affairs. 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 DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482.

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 [email protected].

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar 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.dbrsmorningstar.com or contact us at [email protected].
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