Fitch Affirms MSBAM Trust 2014-C15
KEY RATING DRIVERS
The affirmations are due to the overall stable performance of the underlying collateral pool. Fitch reviewed the most recently available financial performance data for the transaction, as well as updated rent rolls for the top 15 loans, which represent 77.2% of the transaction. Of the loans in the pool, 18.8% of the pool reported YE2014 financials; 13.1% reported trailing twelve month (TTM) ending September 2014 financials, 57.4% reported 3Q'14 financials, and 1.2% reported 2Q'14 financials.
As of the February 2015 distribution date, the pool's aggregate principal balance has been reduced by 0.5% to \$1,251.6 million from \$1,257.9 million at issuance. Currently there are no delinquent or specially serviced loans. Two loans (2%) are on the servicer watchlist, one of which has been identified as Fitch loan of concern.
The first servicer watchlist loan (1.7%) is secured by a garden style apartment complex located in Northville, MI. The servicer reported 3Q'14 DSCR was 1.16x with occupancy at 83%, compared to 1.37x and 89% at issuance. The property is under renovation which has resulted in increased total expenses and reduced revenue as units were taken offline during the renovation.
The Fitch loan of concern (0.4%) is secured by a student housing property consisting of two multifamily buildings located in South Bend, IN. As of November 2014, the property occupancy declined to 87% from 94.4% at issuance. The servicer reported 3Q'14 DSCR was 1.08x, compared to UW DSCR of 1.48x. The decline in the DSCR is due to a decline in rental income due to reduced occupancy combined with the increase in expenses.
The largest loan in the pool, Arundel Mills & Marketplace (14%), is a 10 year interest-only loan. The whole loan consists of three pari passu notes totaling \$385 million. Only the A1 note is included in the trust. The collateral consists of Arundel Mills Mall, a 1,554,241 sf super-regional mall, and Arundel Mills Marketplace, an adjacent one-story, anchored shopping center containing 101,535 sf located in Hanover, MD within the Baltimore-Washington Corridor, the property was 99% occupied as of September 2014, compared to 99.5% at underwriting. Anchors include Bass Pro Shops (7.7% of NRA), Cinemark Theatres (6.5% of NRA) and Burlington Coat Factory (4.9% of NRA). The loan is sponsored by Simon Property Group, Inc. (59%) and Kan Am, LLC (41%). The servicer reported 3Q 2014 DSCR was 3.09x, compared to 2.96x at issuance.
The second largest loan in the pool, AmericasMart (12.8% of the pool), is secured by a 7.1 million sf wholesale trade market with approximately 4.6 million sf of rentable area in four attached buildings, 3.5 million sf of which is permanent space. The whole loan consists of four pari passu notes with a total current balance of \$548.8 million, amortizing from \$560 million at issuance. Only the A4 note is included in the trust. Located in the CBD of Atlanta, GA, the property caters to a variety of retailers, wholesalers and manufacturers that engage in wholesale trade. There are over 1,500 permanent tenants occupying approximately 3.5 million sf, and 1.1 million sf of temporary exhibition space that can be leased during trade shows. The loan is sponsored by AMC Inc. The servicer reported occupancy as of November 2014 was 88%, compared to 85% at issuance. Servicer reported fiscal year-end August 2014 DSCR was 1.81x, compared to 1.76x at issuance.
The third largest loan in the pool, La Concha Hotel & Tower (7.8%), is a 483-key, full-service hotel in San Juan, Puerto Rico in the Condado resort area. The property consists of two buildings, La Concha Hotel and La Concha Tower. La Concha Hotel was originally constructed in 1958 and redeveloped in 2007 and offers 248 hotel keys, 30,000 sf of meeting space, a 17,000-sf casino and five restaurants and bars. La Concha Tower was constructed in 2010 and features 235 one-bedroom suites and is marketed as an extended-stay product. The property is branded with a Renaissance Marriott franchise flag that expires in 2032. The whole loan consists of two pari passu notes. Only the A1 note is included in this transaction. Per the June 2014 STR report, the property was performing above its comp set with occupancy, ADR and RevPar at 90.1%, \$251.55 and \$226.53, respectively, compared to 89.7%, \$246.93 and \$221.37, respectively, at issuance. As of September 2014, the property was 92% occupied, compared to 89.6% at issuance. Servicer reported 3Q'14 DSCR was 2.38x, compared to 2.34x at issuance.
RATING SENSITIVITIES
The Rating Outlook for all classes remains Stable. Due to the recent issuance of the transaction and stable performance, Fitch does not foresee positive or negative ratings migration until a material economic or asset-level event changes the transaction's portfolio-level metrics. Additional information on rating sensitivity is available in the report 'Morgan Stanley Bank of America Merrill Lynch Trust, Series 2014-C15' (July 16, 2014) at www.fitchratings.com.
Fitch affirms the following classes as indicated:
--\$42.2 million class A-1 at 'AAAsf'; Outlook Stable;
--\$89.5 million class A-2 at 'AAAsf'; Outlook Stable;
--\$86.6 million class A-SB at 'AAAsf'; Outlook Stable;
--\$210 million class A-3 at 'AAAsf'; Outlook Stable;
--\$321.2 million class A-4 at 'AAAsf'; Outlook Stable;
--IO class X-A at 'AAAsf'; Outlook Stable;
--\$52.6 million class A-S at 'AAAsf'; Outlook Stable;
--\$81 million class B at 'AA-sf'; Outlook Stable;
--Exchangeable class PST at 'A-sf'; Outlook Stable;
--\$444.5 million class C at 'A-sf'; Outlook Stable;
--IO class X-B at 'AA-sf'; Outlook Stable;
--\$64.8 million class D at 'BBB-sf'; Outlook Stable;
--\$13.5 million class E at 'BB+sf'; Outlook Stable;
--\$10.8 million class F at 'BB-sf'; Outlook Stable.
Fitch does not rate the IO class X-C, classes G, H and J.
A comparison of the transaction's Representations, Warranties, and Enforcement (RW&E) mechanisms to those of typical RW&Es for the asset class is available in the following report: -- Morgan Stanley Bank of America Merrill Lynch Trust Series 2014-C15 Representations and Warranties New Issue Appendix -- (July 16, 2014).
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