Morningstar Credit Ratings Assigns Preliminary Ratings for COMM 2014-TWC Mortgage Trust Commercial Mortgage Pass-Through Certificates (COMM 2014-TWC)

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Jan 27, 2014, 12:31 ET

NEW YORK, Jan. 27, 2014 /PRNewswire/ -- Morningstar Credit Ratings, LLC today assigned preliminary ratings for the commercial mortgage-backed securities (CMBS) transaction COMM 2014-TWC Mortgage Trust Commercial Mortgage Pass-Through Certificates. The preliminary ratings are based on information known to Morningstar as of Jan. 27, 2014.

PRELIMINARY RATINGS (AS OF JAN. 27, 2014)
	Balance/ Notional Amt	Preliminary Ratings	Morningstar DSCR	Morningstar BLTV	Morningstar ELTV	Credit Support Levels
Class	Balance/ Notional Amt	Preliminary Ratings	Morningstar DSCR	Morningstar BLTV	Morningstar ELTV	Credit Support Levels
Class A	$332,000,000	AAA	3.09 x	42.30%	48.00%	50.82%
Class X-CP	$332,000,000	AAA	n/a	n/a	n/a	n/a
Class X-EXT	$332,000,000	AAA	n/a	n/a	n/a	n/a
Class B	$122,000,000	AA-	2.65 x	49.40%	56.10%	32.74%
Class C	$53,500,000	A-	2.37 x	55.20%	62.80%	24.82%
Class D	$69,500,000	BBB-	2.08 x	62.80%	71.40%	14.52%
Class E	$65,000,000	BB-	1.87 x	69.90%	79.40%	4.89%
Class F	$33,000,000	B	1.76 x	73.50%	83.50%	0.00%

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

Initial balance of $675 million;
Three-year, floating rate interest-only loan that matures in February 2017 (not including three one-year extension options);
No subordinate or mezzanine debt is included in the transaction;
Loan collateral is a Class A 1.08 million-square-foot office condominium building located within Time Warner Center, which is an approximately 2.8 million-square-foot mixed-use property situated between West 58th and West 60th Streets on Columbus Circle in New York City; and
The property is being acquired via a sale-leaseback with the current owner, Time Warner, Inc. Time Warner operates its corporate headquarters in this location and has occupied the space in the building since it was constructed in 2003. As part of the sale, Time Warner will lease back its current space from the sponsors for a five-year term through December 2018 (with one one-year extension option). Morningstar expects that Time Warner will vacate this property upon the lease's expiration and relocate its headquarters to a site in Manhattan that is expected to be developed by the sponsor for this loan, The Related Companies, L.P.

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

Net cash flow (NCF) of $64.3 million;
Morningstar's NCF is lower than the arranger's NCF by 6.6 percent;
Interest-only debt service coverage ratio (DSCR) of 1.76 x based on an interest rate of 5.35 percent (LIBOR spread of 235 basis points plus the LIBOR rate cap of 300 basis points);
Morningstar NCF debt yield of 9.5 percent;
Morningstar property value of $918.9 million, 29.9 percent lower than the appraised value; and
Beginning loan-to-value ratio of 73.5 percent and an ending loan-to-value ratio of 83.5 percent.

For complete details about the preliminary ratings for this transaction, Morningstar's Pre-Sale analysis package, including the Pre-Sale 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 437,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 10 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 has more than $176 billion in assets under advisement and management as of Sept. 30, 2013. 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.

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SOURCE Morningstar, Inc.