Morgan Stanley and Bank of America Merrill Lynch plan to issue $911 million of securities backed by 67 mortgage loans on 72 multifamily and commercial real estate properties.
The deal, MSBAM 2014-C17, is supported by properties that are distributed across 25 states; however, 54.5% of the properties are located in five states including California, Pennsylvania, Massachusetts, Arizona and Texas.
The largest loan exposure, Marriott Downtown Philadelphia, represents 9.6% of the portfolio balance. The top 10 largest loans represent 47.3% of the cut-off portfolio balance; all other loans each represent less than 2.6% of the portfolio balance. The priority of payments on the certificates is generally based on a sequential pay structure.
According to a Morningstar presale report, the pool is highly levered with a loan-to-value (LTV) ratio of 89.5%, five of the top 10 loans in the pool have an LTVs that exceeds 100%. The ratings agency also noted that 36 of the 67 loans in the pool are structured with interest-only payment periods, including nine loans that are full-term interest-only (23.9%). The remaining 27 loans are structured with interest-only periods that range from 12 months to 72 months.
The trust will offer seven tranches of triple-A rated notes that have been assigned preliminary ratings by DBRS, Moody’s Investors Serivice and Morningstar. Also on offer are class B notes that will be rated AA’/’Aa3’/ AA’. The class PST and class C notes were each assigned preliminary ratings of A’/ A-’ by DBRS and Morningstar only.