Fitch Affirms MSBAM Trust 2014-C15

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed 14 classes of Morgan Stanley Bank of America Merrill Lynch Trust, Series 2014-C15 commercial mortgage pass-through certificates. The Rating Outlook for all classes remains Stable. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations are due to the overall stable performance of the collateral pool since issuance. As of the March 2016 distribution date, the pool's aggregate principal balance has been reduced by 1.5% to $1,064 million from $1,079.8 million at issuance. There are four servicer watchlist loans (16.7% of the pool). Fitch has identified three loans (3.1%) as Fitch loans of concern (FLOC), including one specially serviced loan (1%).

The first FLOC is the Woodland Glen Apartments loan (1.7%), a 10 year partial interest only (IO) loan (IO for the initial 24 months). It is secured by a 304 unit garden style multifamily property located in Northville, MI. This property has been affected by fire losses and suffered major damage in 2015. Per the servicer, repairs are in progress and contractors are performing work. The collateral has property insurance against damages and business interruption. However, the borrower is in dispute with the insurance company regarding the coverage and has hired public adjuster. The case is in arbitration.

The second FLOC is the Campus Court loan (1%), a 10 year balloon loan amortizing on a 30 year schedule. It is secured by a 333 bed (198 units) student housing complex located in Bloomington, IN. The loan was transferred to special servicing in May 2015 due to payment default. Foreclosure has been filed and a receiver was appointed by the court in August 2015. The property's occupancy has dropped significantly to 73% as of 3Q15 from 95% at issuance. The property has outdated internet WIFI system which has impacted demand. The special servicer is evaluating exit strategies..

The third FLOC is the Darby Row & The Belfry Apartments loan (0.4%), a 10 year partial interest only (IO) loan (IO for the initial 24 months). It is secured by two student housing buildings located in South Bend, IN. Darby Row has 19 units with 35 beds and The Belfry has 18 units with 36 beds. Both buildings are in close vicinity to the University of Notre Dame.

As of 3Q15, the servicer reported DSCR decreased to 0.71x, compared to 0.74x at YE2014 and 1.48x at UW. The decline in the DSCR is due to the decline in income combined with the increase in expenses. As of YE2014, occupancy was 85% compared to 94% at UW. The occupancy has since improved to 92% based on 3Q15 rent roll.

The largest loan in the pool, Arundel Mills & Marketplace (14.1%), 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. The property is located in Hanover, MD with an occupancy rate of 99.7% as of YE2015, 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 was on the servicer watchlist due to the lease rollover of three major tenants: TJ Maxx, Burlington Coat Factory and David & Buster's in January 2016. All have since extended their leases. The loan is sponsored by Simon Property Group, Inc. (59%) and Kan Am, LLC (41%). The loan is performing in line with issuer underwriting expectations. The servicer reported YE2015 DSCR was 2.98x, compared to 2.96x at issuance.

The second largest loan in the pool, AmericasMart (12.6% 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. The whole loan consists of four pari passu notes with a total current balance of $535.8 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 can be leased during trade shows. The loan is sponsored by AMC Inc. The servicer reported occupancy for the performance space as of January 2016 was 90.2%, compared to 85% at issuance. The loan is performing in line with issuer underwriting expectations. Servicer reported fiscal year 3Q2015 DSCR was 1.77x, compared to 1.76x 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.

DUE DILIGENCE USAGE

No third party due diligence was provided or reviewed in relation to this rating action.

Fitch has affirmed the following classes:

--$32.8 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;

--$44.5 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.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 28 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748781

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395

Related Research

Morgan Stanley Bank of America Merrill Lynch Trust, Series 2014-C15 -- Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=751411

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1002096

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1002096

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160406006551/en/

Fitch Ratings
Primary Analyst
Amy Gan, +1-212-612-9143
Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations
Sandro Scenga, +1 212-908-0278 (New York)
[email protected]

Source: Fitch Ratings

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