DBRS Confirms All Classes of Morgan Stanley Bank of America Merrill Lynch Trust 2014-C18

DBRS Limited (DBRS) has today confirmed all classes of MSBAM 2014-C18 Mortgage Trust as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class A-SB at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class A-4 at AAA (sf)
-- Class A-S at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AAA (sf)
-- Class X-C at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (low) (sf)
-- Class PST at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (low) (sf)
-- Class F at B (low) (sf)

DBRS does not rate Class G, the first loss piece. The Class A-S, Class B, and Class C certificates may be exchanged for the Class PST certificates (and vice versa). All trends are Stable.

The rating confirmations reflect that the current performance of the transaction has remained in line with DBRS expectations since issuance in October 2014. The collateral consists of 65 loans secured by 100 commercial properties. As of the July 2015 remittance, the pool has a balance of $1,030 million, representing a collateral reduction of 0.3% since issuance as a result of scheduled loan amortization. The transaction benefits from 17.2% of the pool being located in urban markets. In addition, the pool’s combined rural and tertiary concentration is only 11.7%.

As of the July 2015 remittance, there are no loans on the servicer’s watchlist or in special servicing. DBRS has identified two loans in the transaction with unique risks that will be monitored closely, which are highlighted below.

The 250 Munoz Rivera loan (Prospectus ID#6, 3.9% of the current pool balance) is secured by an office property in San Juan, Puerto Rico. The subject is currently 80.4% occupied with UBS Financial Services and AIG Insurance Group combining to occupy 41.1% of the NRA and to contribute 41.5% of the property’s base rent. The tenants’ leases expire in November 2022 and December 2021, respectively. Given Puerto Rico’s ongoing debt repayment issues, DBRS will monitor how a potential default could affect the property. DBRS term debt service coverage ratio (DSCR) was 1.78 times (x) as of origination. The loan remains current.

The Value Place Williston loan (Prospectus ID#14, 1.9% of the current pool balance) is secured by a 248-key extended-stay hotel in Williston, North Dakota, built in 2012. The subject depends primarily on demand generated directly by the oil and gas industry or in professions that support the oil and gas industry. The Bakken and Three Forks shale oil formation is located near the property. While recent technological developments have made shale drilling profitable as long as the price of oil per barrel remains above $60 per barrel, the recent volatility in prices is concerning. As of August 2015, the price of oil has dropped to approximately $41 per barrel, the lowest since March 2009. According to YE2014 reporting, the loan had occupancy of 71.7%, an average weekly rate of $596 and RevPAR of $428, which compare similarly to issuance figures of 65.9%, $618 and $408, respectively. The loan remains current and benefits from a 15-year amortization schedule, which results in a maturity balance per key of approximately $35,600.

At issuance, DBRS shadow-rated one loan, Prospectus ID#2 300 North LaSalle, representing 9.7% of the current pool balance as investment grade. DBRS has today confirmed the performance of this loan remains consistent with investment-grade loan characteristics.

DBRS continues to monitor this transaction in its Monthly CMBS Surveillance Report, with additional information on the DBRS viewpoint for this transaction, including details on the largest loans in the pool and loans on the servicer’s watchlist. The July 2015 Monthly Surveillance Report for this transaction will be published shortly. If you are interested in receiving this report, contact us at info@dbrs.com.

Notes:

All figures are in U.S. dollars unless otherwise noted.

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 to the right under Related Research or by contacting us at info@dbrs.com.

The applicable methodologies are North American CMBS Rating Methodology (June 2015) and CMBS North American Surveillance (January 2015), which can be found on our website under Methodologies.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.