Fitch expects to rate the transaction and assign Rating Outlooks as follows:
(a) Notional amount and interest only.
(b) Class A-M, B and C certificates may be exchanged for class PEZ certificates, and class PEZ certificates may be exchanged for class A-M, B, and C certificates.
(c) Privately placed and pursuant to Rule 144A.
The expected ratings are based on information provided by the issuer as of
The certificates represent the beneficial ownership interest in the trust, primary assets of which are 49 loans secured by 60 commercial properties having an aggregate principal balance of approximately
Fitch reviewed a comprehensive sample of the transaction's collateral, including site inspections on 71.8% of the properties by balance, cash flow analysis of 82.7%, and asset summary reviews on 82.6% of the pool.
KEY RATING DRIVERS
High Leverage: The pool's Fitch DSCR and LTV of 1.14x and 110.5%, respectively, are worse than the 1st quarter 2014 averages of 1.18x and 104.7%, respectively.
Diverse Property Type Mix: The pool has a good mix of property types, with retail as the largest property type at 23.7%, followed by multifamily at 18.3%, mixed-use at 18.2%, office at 12.6% and hotel at 12.2%. There are 13 retail properties. None of the retail properties are malls. The retail properties consist of a mix of anchored and unanchored shopping centers.
Limited Amortization: The pool is scheduled to amortize by 11.7% of the initial pool balance prior to maturity. Three loans (16.4%), including the largest loan, are full-term interest only, and 20 loans (47.3%) are partial interest only. Fitch rated transactions in the 1st quarter of 2014 had an average full-term interest only percentage of 15.8% and a partial interest only percentage of 37.6%. This transaction has a lower than average amount of full-term interest only but a higher amount of partial interest only.
For this transaction, Fitch's net cash flow (NCF) was 11.5% below the most recent NOI (for properties that a recent 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 severities on defaulted loans, and could result in potential rating actions on the certificates. Fitch evaluated the sensitivity of the ratings assigned to COMM 2014-CCRE18 certificates and found that the transaction displays slightly above average sensitivity to further declines in NCF. In a scenario in which NCF declined a further 20% from Fitch's NCF, a downgrade of the junior 'AAAsf' certificates to 'BBB+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 on pages 75 - 76.
The master servicer will be
Fitch property-level cash flow analysis, modeling assumptions, and application of Fitch mortgage constants and cap rates were generally consistent with
--For non-pari passu full-term IO conduit loans in this transaction, the FC-DSCR is weighted 33.3% FT-DSCR and 66.7% FK-DSCR. In addition, amortization credit has been increased for all amortizing loans. This criteria update is based on recent regression testing which demonstrated a more significant difference in the performance of amortizing versus interest-only loans.
--The confidence interval for the 'AAAsf' rating category has been increased from 99.990% to 99.995% and the confidence interval for the 'AAsf' rating category has been decreased from 99.920% to 99.880%. This criteria update is based on an examination of tranche thickness and implied loss coverage multiples as they compare to other structured finance sectors.
An updated version of the Criteria for Analyzing Multiborrower U.S. Commercial Mortgage Transactions containing a detailed description and examples of the updates mentioned above is anticipated to be published in
Additional Information is available at 'www.fitchratings.com'.
--'Criteria for Analyzing Multiborrower U.S. Commercial Mortgage Transactions' (
--'Global Structured Finance Rating Criteria' (
--'Rating Criteria for U.S. Commercial Mortgage Servicers' (
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (
--'Counterparty Criteria for Structured Finance and Covered Bonds' (
Criteria for Analyzing Multiborrower U.S. Commercial Mortgage Transactions
Global Structured Finance Rating Criteria
Rating Criteria for U.S. Commercial Mortgage Servicers
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
Counterparty Criteria for Structured Finance and Covered Bonds
Source: Fitch Ratings
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