Morningstar Credit Ratings Assigns Preliminary Ratings for J.P. Morgan Chase Commercial Mortgage Securities Trust 2014-FL5, Commercial Mortgage Pass-Through Certificates, Series 2014-FL5 (JPMCC 2014-FL5)

NEW YORK, Sept. 9, 2014 /PRNewswire/ -- Morningstar Credit Ratings, LLC today assigned preliminary ratings for the commercial mortgage-backed securities (CMBS) transaction J.P. Morgan Chase Commercial Mortgage Securities Trust 2014-FL5, Commercial Mortgage Pass-Through Certificates, Series 2014-FL5 (JPMCC 2014-FL5). The preliminary ratings are based on information known to Morningstar as of Sept. 9, 2014.

The key characteristics of the portfolio of commercial real estate loans supporting JPMCC 2014-FL5 are:

• Ten floating-rate, interest-only mortgage loans secured by 10 hospitality and office real estate properties;
• Nine of the mortgage loans have been divided into a senior pooled component and one or more subordinate nonpooled components;
• An aggregate cutoff portfolio balance of approximately $671.3 million, of which the senior pooled component and the undivided mortgage loan have an aggregate cutoff balance of $516.7 million. The subordinate nonpooled component cutoff balance is $154.6 million;
• Properties are distributed across seven states, with 30.5 percent of the pooled component cutoff balance located in California and 48.3 percent of the pooled component cutoff balance located in New York, Florida, and Georgia;
• The largest loan exposure is the Roosevelt Hotel in New York, representing 21.4 percent of the pooled component cutoff balance;
• The top three loans represent 54.2 percent of the pooled component cutoff balance;
• The largest exposure by property type is hospitality at 91.1 percent, as measured by the pooled component cutoff balance; and
• The transaction also includes subordinate debt in the form of $80.8 million of B-Note financing and a $193.5 million mezzanine loan.

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

• A net cash flow (NCF) of $79.8 million, which is lower than the arranger's NCF by 5.9 percent;
• Based on Morningstar's stressed interest rate, the debt service coverage ratios (DSCRs) for the pooled component cutoff balance and the total mortgage cutoff balance are 2.75x and 1.89x, respectively;
• The Morningstar value, which is $937.8 million using a weighted-average capitalization rate of 8.5 percent, is 36.9 percent lower than the appraised value of $1.49 billion. The value resulted in weighted-average loan/value (LTV) ratios of 54.8 percent based on the pooled component cutoff balance, 71.1 percent based on the total mortgage cutoff balance, and 100.2 percent based on the total debt cutoff balance.

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 at 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.

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

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