Morningstar DBRS Confirms All Credit Ratings on MCAP CMBS Issuer Corporation, Series 2014-1

DBRS Limited (Morningstar DBRS) confirmed all credit ratings on the Commercial Mortgage Pass-Through Certificates, Series 2014-1 issued by MCAP CMBS Issuer Corporation, Series 2014-1 (the Issuer) as follows:

-- Class F at BBB (low) (sf)
-- Class G at B (sf)

All trends remain Stable.

Since Morningstar DBRS' last credit action, the former largest loan in the pool, 3571-3609 Sheppard Ave East (Prospectus ID#11; formerly 50.7% of the pool), was fully paid off from the trust. As of the November 2024 reporting, only two loans remain in the pool. Both loans are current, with no updated appraisals reported since issuance, and have been granted short-term maturity extensions through December 2024 to secure take-out financing. To test the recoverability of the remaining certificates, Morningstar DBRS considered liquidation scenarios for both loans based on conservative haircuts to the issuance appraisal values and concluded that any losses are likely to be contained in the nonrated Class H certificate. Overall, Morningstar DBRS determined that the underlying assets would have to sustain significant declines in performance and/or reductions to the issuance appraised values of more than 60.0% in aggregate for the credit rated bonds to be at risk of default.

The two remaining loans are the 175 Rue de Rotterdam (Prospectus ID#15; 80.4% of the pool), secured by an office/industrial property, and the 5498 Boulevard Henri-Bourassa loan (Prospectus ID#32; 19.6% of the pool), secured by an unanchored retail property, located in Saint Augustine de Desmaures and Montréal, respectively, in Québec. Both loans have full recourse and are fully occupied by single tenants on long-term leases, with no near-term termination options, benefiting from historically stable performances since issuance. Annual improvements in cash flow have primarily been driven by scheduled rent steps. Based on the YE2023 financials, the 175 Rue de Rotterdam and 5498 Boulevard Henri-Bourassa properties reported debt service coverage ratios and debt yields of 1.85 times (x) and 16.8%, and 1.22x and 11.0%, respectively. As such, Morningstar DBRS believes that these loans are well-positioned for refinance, supporting the credit rating action.

Morningstar DBRS' credit ratings on the applicable classes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transactions' respective press releases at issuance.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS   
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.
 
A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024), https://dbrs.morningstar.com/research/437781.

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

Notes:
All figures are in Canadian dollars unless otherwise noted.

The principal methodology is North American CMBS Surveillance Methodology (March 1, 2024; https://dbrs.morningstar.com/research/428798).

Other methodologies referenced in this transaction are listed at the end of this press release.

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@morningstar.com.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

Morningstar DBRS notes that a sensitivity analysis was not performed for this review as the transaction is in wind-down. In such cases, Morningstar DBRS credit ratings are typically based on a recoverability analysis. Factors that could contribute to credit ratings sensitivity in these cases are described in the regulatory disclosures provided in conjunction with this press release.

DBRS Limited
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Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

North American CMBS Multi-Borrower Rating Methodology (March 1, 2024)/North American CMBS Insight Model v 1.2.0.0, https://dbrs.morningstar.com/research/428797

Morningstar DBRS Commercial Real Estate Property Analysis Criteria (September 19, 2024), https://dbrs.morningstar.com/research/439702

North American Commercial Mortgage Servicer Rankings (August 23, 2024), https://dbrs.morningstar.com/research/438283

Legal and Derivatives Criteria for Canadian Structured Finance (August 12, 2024), https://dbrs.morningstar.com/research/437761

A description of how Morningstar DBRS analyzes structured finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/410863.

For more information on this credit or on this industry, visit https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.