News Column

Fitch to Rate MSBAM 2014-C16 Commercial Mortgage Pass-Through Certificates; Presale Issued

May 30, 2014

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has issued a presale report on Morgan Stanley Bank of America Merrill Lynch Trust, series 2014-C16 commercial mortgage trust pass-through certificates.

Fitch expects to rate the transaction and assign Outlooks as follows:

--$52,700,000 class A-1 'AAAsf'; Outlook Stable;

--$132,100,000 class A-2 'AAAsf'; Outlook Stable;

--$72,300,000 class A-SB 'AAAsf'; Outlook Stable;

--$43,900,000 class A-3 'AAAsf'; Outlook Stable;

--$250,000,000 class A-4 'AAAsf'; Outlook Stable;

--$335,852,000 class A-5 'AAAsf'; Outlook Stable;

--$956,533,000a class X-A 'AAAsf'; Outlook Stable;

--$69,681,000b class A-S 'AAAsf'; Outlook Stable;

--$91,853,000b class B 'AA-sf'; Outlook Stable;

--$209,044,000b class PST 'A-sf'; Outlook Stable;

--$47,510,000b class C 'A-sf'; Outlook Stable;

--$139,363,000a,c class X-B 'A-sf'; Outlook Stable;

--$72,848,000c class D 'BBB-sf'; Outlook Stable;

--$28,506,000c class E 'BB-sf'; Outlook Stable.

a Notional amount and interest only.

b Class A-S, B and C certificates may be exchanged for class PST certificates, and class PST certificates may be exchanged for class A-S, B and C certificates.

c Privately placed pursuant to Rule 144A.

The expected ratings are based on information provided by the issuer as of May 27, 2014. Fitch does not expect to rate the $12,669,000 class F, the $14,253,000 class G, the $42,759,846 class H, or the $98,187,846 interest-only class X-C.

The certificates represent the beneficial ownership in the trust, primary assets of which are 76 loans secured by 110 commercial properties having an aggregate principal balance of approximately $1.267 billion as of the cutoff date. The loans were contributed to the trust by Morgan Stanley Mortgage Capital Holdings LLC; Bank of America, National Association; and CIBC Inc.

Fitch reviewed a comprehensive sample of the transaction's collateral, including site inspections on 72.2% of the properties by balance, cash flow analysis of 73%, and asset summary reviews on 83.5% of the pool.

KEY RATINGS DRIVERS

High Leverage: The pool's Fitch DSCR and LTV of 1.25x and 105.4%, respectively, are higher than the first-quarter 2014 averages of 1.18x and 104.7%, respectively.

Large Hotel Concentration: At 24%, the transaction has among the highest hotel concentrations for Fitch-rated transactions in 2013 and 2014. Four of the top 10 loans (14.3% of the pool) are secured by hotel properties.

High Concentration of Full and Partial Interest-Only Loans: Nine loans (24.7%) are subject to full-term interest-only payments, and 31 loans (40.6%) are subject to partial interest-only payments. These figures are higher than those for Fitch-rated transactions in 1Q'14, which had average full term and partial interest-only loans of 15.8% and 37.6%, respectively.

Collateral Quality: 42.2% of the pool, including five of the largest 10 loans, received property quality grades of 'B+' or better. Higher property quality grades result in a lower probability of loss in Fitch's multiborrower conduit model.

RATING SENSITIVITIES

For this transaction, Fitch's net cash flow (NCF) was 16.1% below the most recent reported net operating income (NOI) (for properties that NOI was provided, excluding properties that were stabilizing during this period).

Unanticipated further declines in property-level NCF could result in higher defaults and loss severity on defaulted loans and could result in potential rating actions on the certificates. Fitch evaluated the sensitivity of the ratings assigned to MSBAM 2014-C16 certificates and found that the transaction displays average sensitivity to further declines in NCF. In a scenario in which NCF declined a further 10% from Fitch's NCF, a downgrade of the junior 'AAAsf' certificates to 'AA-sf' could result. In a scenario in which NCF declined a further 20% from Fitch's NCF, a downgrade of the junior 'AAAsf' certificates to 'A-sf' could result. In a more severe scenario, in which NCF declined a further 30% from Fitch's NCF, a downgrade of the junior 'AAAsf' certificates to 'BBB-sf' could result. The presale report includes a detailed explanation of additional stresses and sensitivities.

For a detailed description of Fitch's rating analysis, please see the report titled 'Morgan Stanley Bank of America Merrill Lynch Trust, Series 2014-C16', dated May 28, 2014 and available on the Fitch Ratings web site at 'www.fitchratings.com'.

The presale report is available at 'www.fitchratings.com'. For more information about Fitch's comprehensive subscription service FitchResearch, which includes all presale reports, surveillance, and credit reports on more than 20 asset classes, contact product sales at +1-212-908-0800 or at 'webmaster@fitchratings.com'.

The master servicer will be Wells Fargo Bank, National Association, rated 'CMS1-' by Fitch. The special servicer will be LNR Partners, LLC, rated 'CSS1-' by Fitch.

The presale report is available at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--Criteria for Analyzing Multiborrower U.S. Commercial Mortgage Transactions (August 2013)

--Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions (September 2013)

--Global Structured Finance Rating Criteria (May 2014)

--Criteria for Special-Purpose Vehicles in Structured Finance Transactions (May 2012)

--Rating Criteria for U.S. Commercial Mortgage Servicers (February 2014)

--U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (December 2013)

--Counterparty Criteria for Structured Finance and Covered Bonds (May 2013)

Applicable Criteria and Related Research: Morgan Stanley Bank of America Merrill Lynch Trust, Series 2014-C16 (US CMBS)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749289

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=832341

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

Primary Analyst

Jeffrey Henry, +1 212-908-9163

Director

Fitch Ratings, Inc.

33 Whitehall Street

New York, NY 10004

or

Secondary Analyst

Rebecca Levitan, +1 212-908-0398

Analyst

or

Committee Chairperson

Eric Rothfeld, +1 212-908-0761

Managing Director

or

Media Relations:

Sandro Scenga, +1 212-908-0278

sandro.scenga@fitchratings.com

Source: Fitch Ratings


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