Morningstar Credit Ratings Assigns Preliminary Ratings for CGBAM Commercial Mortgage Trust 2014-HD, Commercial Mortgage Pass-Through Certificates, Series 2014-HD (CGBAM 2014-HD)

NEW YORK, May 7, 2014 /PRNewswire/ -- Morningstar Credit Ratings, LLC today assigned preliminary ratings for the commercial mortgage-backed securities (CMBS) transaction CGBAM Commercial Mortgage Trust 2014-HD, Commercial Mortgage Pass-Through Certificates, Series 2014-HD (CGBAM 2014-HD). The preliminary ratings are based on information known to Morningstar as of May 6, 2014.

PRELIMINARY RATINGS (AS OF May 6, 2014)


Balance/Notional Amt.

Preliminary Ratings

Morningstar DSCR

Morningstar BLTV

Morningstar ELTV

Credit Support Levels

Class

Class A

$95,423,000

AAA

4.42x

26.0%

26.0%

62.9%

Class X-CP

$163,781,000

AAA

N/A

N/A

N/A

N/A

Class X-NCP

$163,781,000

AAA

N/A

N/A

N/A

N/A

Class B

$39,211,000

AA

3.13x

36.7%

36.7%

47.7%

Class C

$29,147,000

A

2.58x

44.7%

44.7%

36.4%

Class D

$38,517,000

BBB

2.09x

55.2%

55.2%

21.4%

Class E

$55,202,000

BB-

1.64x

70.3%

70.3%

0.0%

The key characteristics of the mortgage loan collateral supporting CGBAM 2014-HD are:

  • A single floating-rate mortgage loan with an initial term of two years and subject to three one-year extension options. The mortgage loan is secured by the borrower's fee simple and leasehold interests in two full-service boutique hotels, Hudson in Manhattan and Delano South Beach in Miami;
  • The aggregate principal balance of the first mortgage loan, which is collateral for the trust, is $257.5 million; and
  • The transaction also includes subordinate debt in the form of a $42.5 million companion loan, or B-note, and $150.0 million of mezzanine financing.

Based on information provided on the arranger's website, Morningstar's analysis of the loans yielded the following Morningstar metrics:

  • An aggregate net cash flow (NCF) of $30.1 million;
  • The Morningstar NCF is lower than the arranger's NCF by 9.5 percent;
  • Weighted-average current debt service coverage ratio, or DSCR, on the trust loan of 3.09x based on the loan spread and current one-month LIBOR. Based on the Morningstar-stressed interest rate of 7.1 percent, the DSCR is 1.64x;
  • Morningstar valued the properties at $371.6 million using a weighted average capitalization rate of 8.1 percent. To account for Morningstar's estimate of required near-term capital improvements, Morningstar lowered its value by $5.2 million to a final aggregate value of $366.4 million; and
  • The Morningstar value, which equates to $345,629 per room, is 41.1 percent lower than the aggregate appraised value of $621.6 million. The Morningstar value resulted in a weighted-average loan-to-value (LTV) ratio of 70.3 percent for the first mortgage loan.

For complete details about the preliminary ratings of this transaction, Morningstar's Presale analysis package, including the Presale Report and the Representations, Warranties, and Enforcement Mechanisms, is available under the "Ratings Reports" tab on https://ratingagency.morningstar.com. Information subsequently received could result in the assignment of final ratings that differ from the preliminary ratings.

About Morningstar Credit Ratings, LLC and Morningstar, Inc.
Morningstar Credit Ratings, LLC is a Nationally Recognized Statistical Rating Organization (NRSRO) that specializes in structured credit research and ratings, and offers a wide array of services including new-issue ratings and analysis, operational risk assessments, surveillance services, data, and technology solutions.

Morningstar Credit Ratings, LLC is a subsidiary of Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research in North America, Europe, Australia, and Asia.

Morningstar, Inc. offers an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. Morningstar provides data on approximately 456,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 12 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its registered investment advisor subsidiaries and had approximately $164 billion in assets under advisement and management as of March 31, 2014. The company has operations in 27 countries.

Morningstar, Inc. is not an NRSRO and its credit ratings on corporate and municipal issuers are not NRSRO credit ratings.

©2014 Morningstar, Inc. All Rights Reserved.

MORN-R

Media Contact:
Michelle Weiss, +1 267-960-6014 or michelle.weiss@morningstar.com

SOURCE Morningstar, Inc.



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