Morgan Stanley and Bank of America Merrill Lynch priced a $911 million of bonds backed by 67 mortgage loans on 72 multifamily and commercial real estate properties.
The conduit, MSBAM 2014-C17, priced with mixed spread changes relative to the previous conduit, COMM 2014-UBS4, which priced on July 23. Both the super senior, 10-year notes, which priced at swaps plus 74 basis points, and the subordinate 10-year notes, which priced at swaps plus 100 basis points, yield 5 basis points less than comparable tranches of the previous print.
The bonds yield 3.38% and 3.65% respectively, according to a deal document.
Further down the credit curve, the double-A rated, 10-year B notes priced 2 basis points wider that the previous conduit, at swaps plus 145 basis points and yielded 4.10%. The single-A rated, 10-year C notes priced 12 basis points wider at swaps plus 190 basis points and yielded 4.55%.
MSBAM 2014-C17 is supported by properties that are distributed across 25 states; however, 54.5% of the properties are located in five states - 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 exceed 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.
DBRS, Moody’s Investors Service and Morningstar assigned preliminary ratings to the deal.
