MUMBAI, India & CHENNAI, India--(BUSINESS WIRE)--Fitch Ratings assigns the following ratings and Rating Outlooks to Morgan Stanley Bank of America Merrill Lynch Trust, series 2014-C16 commercial mortgage trust pass-through certificates:
--$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;
--$91,853,000ac class X-B 'AA-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, class B and class C certificates may be exchanged for class PST Certificates, and class PST Certificates may be exchanged for class A-S, class B and class C certificates.
(c) Privately placed pursuant to Rule 144A.
Fitch does not 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.
Since Fitch issued its expected ratings on May 30, 2014, one class balance (X-B) has been updated by the issuer and has decreased from $139,363,000 to $91,853,000. The classes above reflect the final ratings and deal structure.
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 73.0%, 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 24.0%, 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 first quarter 2014, which had average full-term and partial-interest-only loans of 15.8% and 37.6%, respectively.
Collateral Quality: When including five of the largest 10 loans, 42.2% of the pool 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 full-year net operating income (NOI) (for properties for which a full-year 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 presale report titled 'Morgan Stanley Bank of America Merrill Lynch Trust, Series 2014-C16 Commercial Mortgage Pass-Through Certificates', dated May 30, 2014 and available on the Fitch Ratings web site at 'www.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);
--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:
Counterparty Criteria for Structured Finance and Covered Bonds
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961
Rating Criteria for U.S. Commercial Mortgage Servicers
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=735382
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=835258
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