Morningstar DBRS Confirms Credit Ratings on All Classes of Morgan Stanley Capital I Trust 2014-150E; Changes Trends on Six Classes to Stable From Negative

DBRS Limited (Morningstar DBRS) confirmed its credit ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2014-150E issued by Morgan Stanley Capital I Trust 2014-150E as follows:

-- Class A at A (sf)
-- Class A-S at BBB (sf)
-- Class B at BB (sf)
-- Class C at B (sf)
-- Class D at CCC (sf)
-- Class E at CCC (sf)
-- Class F at CCC (sf)
-- Class G at CCC (sf)
-- Class X-A at BBB (sf)
-- Class X-B at BB (sf)

Classes D, E, F, and G have credit ratings that do not typically carry a trend in commercial mortgage-backed securities (CMBS) transactions. Morningstar DBRS changed the trends on the remaining six classes to Stable from Negative.

The credit rating confirmations reflect that the current credit ratings of the certificates are commensurate with the performance of the transaction, which remains stable since Morningstar DBRS' previous credit rating action in July 2024. At that time, Morningstar DBRS downgraded its credit ratings on Classes X-A, X-B, A, A-S, B, C, D, and E based on a liquidation scenario, the results of which suggested that losses could fully erode the balance of the Class G, F, and E certificates and partially erode the balance of the Class D certificate. Given the improved likelihood of principal recovery relative to the current credit ratings of the certificates as well as the marginal increase in occupancy, an updated property appraisal, and an executed loan modification, extending the maturity date to September 2027, Morningstar DBRS changed the trends on Classes A through C to Stable from Negative for this review.

The $525.0 million transaction is secured by the leasehold and subleasehold interests in 150 East 42nd Street, a 42-story Class A office tower totaling 1.7 million square feet (sf) located directly across from Grand Central Terminal. The total debt stack of $700 million includes a $175 million mezzanine loan that is co-terminus with the trust's interest-only (IO) 10-year loan. The loan transferred to the special servicer in September 2024 for maturity default and subsequently the senior loan was modified in February 2025, extending the maturity date to September 2027. The loan returned to the master servicer in February 2025 and will continue to be cash managed the extended maturity date or until paid in full, there are currently $29.9 million in reserves as of the June 2025 remittance. The ground lease expires in 2113. The borrower also sub-ground leases the entire parcel to a condominium board, which created a 47-unit condominium, with the sub-ground lease expiring in 2046. Currently, the borrower is paying an annual ground rent payment of $24.0 million, an increase from the 2024 figure of $22.0 million.

The most recent property appraisal, dated May 2025, valued the collateral at $835.0 million on an as-is basis, representing a 7.2% decline from the issuance appraised value of $900.0 million. The updated valuation reflects a trust debt loan-to-value ratio (LTV) of 62.8%, compared with the issuance appraised LTV of 58.3%. When including the mezzanine debt held outside of the trust, the LTV increases to 83.4%.

According to the March 2025 rent roll, the property was 91.5% occupied with an average base rental rate of $58.02 per square foot (psf), an increase from the March 2024 figures of 89.2% and $55.89 psf, respectively. Large tenants at the property include Wells Fargo Bank, N.A. (Wells Fargo; rated AA with Stable trend; 27.0% of the net rentable area (NRA), lease expiry in December 2028), Mount Sinai Hospital (26.3% of the NRA, lease expiry in March 2046), and Dentsu International (12.1% of the NRA, lease expiry in December 2028). There is minimal short-term tenant rollover risk as tenants occupying 3.8% of the NRA have leases scheduled to expire within the next 12 months; however, there is significant rollover concentration in 2028, following the September 2027 maturity date, both tenants noted above. At Morningstar DBRS' previous review, it was noted that Wells Fargo and Dentsu International are both consolidating space; however, neither of the tenants have termination options prior to the respective December 2028 lease expirations. Given the loan remains in a cash sweep period through the extended maturity, Morningstar DBRS believes there should be sufficient funds set aside to significantly aid in re-leasing costs for those tenants. Although occupancy at the subject has seen a marginal increase, the YE2024 net cash flow (NCF) of $33.3 million represents a decline of 20.6% from YE2023 figure, driven by a decline in expense reimbursements, higher utility expenses, and ground rent increasing $2.0 million to $24.0 million. For the same period, the loan reported a debt service coverage ratio (DSCR) of 1.45 times (x), compared with the YE2023 DSCR of 1.84x.

Morningstar DBRS maintained the analysis from the previous review, which included a Morningstar DBRS Value of $396.7 million based on a Morningstar DBRS NCF of $40.3 million and a 10.17% leasehold cap rate derived from the Morningstar DBRS fee-simple cap rate of 7.25%. The $396.7 million value implies a trust debt LTV of 132.3% and an all-in LTV of 176.5% when including the mezzanine debt. The Morningstar DBRS Value is lower than the updated appraised value of $835.0 million because of conservative assumptions supported by a comparable property analysis in the current market environment. Morningstar DBRS identified several other comparable sale transactions within the Grand Central submarket, concluding a range of cap rates between 9.3% and 10.4%. Morningstar DBRS maintained positive qualitative adjustments totaling 4.75% to the LTV Sizing Benchmarks to account for investment-grade tenants, increased property quality, and the location within one of the most desirable submarkets in New York City.

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 factor(s) 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 (May 16, 2025), https://dbrs.morningstar.com/research/454196.

Classes X-A and X-B are 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 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 U.S. dollars unless otherwise noted.

The principal methodology is North American CMBS Surveillance Methodology (February 28, 2025) https://dbrs.morningstar.com/research/448963.

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 ratings were initiated at the request of the rated entity.

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

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

These are solicited credit ratings.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The Morningstar DBRS Long-Term Obligation Rating Scale definition indicates that credit ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

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

-- North American Single-Asset/Single-Borrower Ratings Methodology (February 28, 2025)
https://dbrs.morningstar.com/research/448962
-- Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (September 19, 2024)
https://dbrs.morningstar.com/research/439702
-- Legal Criteria for U.S. Structured Finance (December 3, 2024)
https://dbrs.morningstar.com/research/444064
-- North American Commercial Mortgage Servicer Rankings (August 23, 2024)
https://dbrs.morningstar.com/research/438283

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/417279. (July 17, 2023)

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