Morningstar Credit Ratings Assigns Preliminary Ratings for GRACE 2014-GRCE Mortgage Trust, Commercial Mortgage Pass-Through Certificates (GRACE 2014-GRCE)

NEW YORK, May 15, 2014 /PRNewswire/ -- Morningstar Credit Ratings, LLC today assigned preliminary ratings for the commercial mortgage-backed securities (CMBS) transaction GRACE 2014-GRCE Mortgage Trust, Commercial Mortgage Pass-Through Certificates (GRACE 2014-GRCE). The preliminary ratings are based on information known to Morningstar as of May 15, 2014.

Preliminary Ratings (as of May 15, 2014)


Balance/

Preliminary

Morningstar DSCR

Morningstar BLTV

Morningstar ELTV

Credit Support Levels

Class

Notional Amt.

Ratings

Class A

$520,598,000

AAA

3.70x

48.60%

48.60%

42.156%

Class X-A

$594,676,000

AAA

3.70x

48.60%

48.60%

42.156%

Class B

$74,078,000

AA-

3.24x

55.60%

55.60%

33.925%

Class C

$51,324,000

A-

2.94x

61.30%

61.30%

28.222%

Class D

$18,000,000

BBB+

2.81x

64.10%

64.10%

26.222%

Class E

$96,000,000

NR

N/A

N/A

N/A

N/A

Class F

$115,000,000

NR

N/A

N/A

N/A

N/A

Class G

$25,000,000

NR

N/A

N/A

N/A

N/A

The key characteristics of the single-loan commercial real estate transaction supporting GRACE 2014-GRCE are:

  • Initial loan balance of $900 million;
  • Seven-year, fixed-rate, interest-only loan that matures in June 2021;
  • No subordinate or mezzanine debt is included in the transaction, although future mezzanine debt is permitted, subject to the satisfaction of conditions set forth in the loan documents;
  • Loan collateral is a Class A, 1.56 million-square-foot office development known as the Grace Building in Midtown Manhattan in New York City; and
  • The borrower on the loan is 1114 6th Avenue Owner, LLC, a Delaware limited liability company owned by a joint venture between Brookfield Office Properties, through its 2006 acquisition of Trizec Properties, Inc., and The Swig Company.

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

  • A net cash flow (NCF) of $69.58 million;
  • The Morningstar NCF is lower than the arranger's NCF by 8.4 percent;
  • An interest-only debt service coverage ratio (DSCR) of 2.11x based on an interest rate of 3.6 percent;
  • A Morningstar NCF debt yield of 7.7 percent;
  • A Morningstar property value of $1.07 billion, 40.5 percent lower than the appraised value; and
  • Beginning and ending loan-to-value (LTV) ratio of 84.1 percent.

For complete details about the preliminary ratings for 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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