Fitch Affirms IMSCI 2014-5; Removes Class G from Rating Watch Negative

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed eight classes of Institutional Mortgage Securities Canada Inc.'s (IMSCI) commercial mortgage pass-through certificates, series 2014-5. A full list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations and the removal of classes G from Rating Watch Negative reflect the overall stable performance of the pool (excluding the specially serviced asset) since issuance. One asset in Fort McMurray, Alberta transferred to special servicing due to a decline in performance. The pool is concentrated with the top 15 loans (including crossed loans) representing 75% of the pool balance and the top three sponsor groups back loans comprising of 35.3% of the pool balance.

The pool balance has been reduced 17.4% to C$257.4 million from C$311.8 million at issuance with 36 loans remaining. There are no full or partial interest only loans in the pool. Five seasoned loans have paid in full since issuance. Three loans (7.9% of the pool) have a scheduled maturity date in 2017.

The specially serviced loan is the 17th largest loan in the pool, Nelson Ridge (2.9%), which transferred to special servicing in March 2016. The asset transferred to special servicing due a significant decline in occupancy stemming from the turmoil in the energy sector. The servicer-reported occupancy as of February 2016 was 45%. Recently, the sponsor and special servicer agreed to a 12-month forbearance agreement. Operations at the property were subsequently affected by the Fort McMurray wildfires in early May 2016 with the city and surrounding area evacuated. The sponsor is working to remediate the property for the return of tenants. The loan has full recourse to the borrower, sponsor and manager. Potential loan losses may be mitigated by recourse provisions, insurance proceeds and a recovery in the energy markets.

The largest loan in the pool is Milton Crossroads West (8.6% of the pool), which is secured by an anchored retail center located in Milton, Ontario. The property was originally three buildings, with two additional buildings to be developed - one of which is now Lonestar Restaurant. Major collateral tenants include SportChek, Indigo and Michael's. The loan is sponsored by Calloway REIT and First Gulf Development Corporation.

The second largest loan is Les Galeries Richelieu (7.7% of the pool), which is secured by a two-building, 227,161 square foot (sf) shopping center located in Saint-Jean-sur-Richelieu (SJR), Quebec. SJR is located approximately 50 kilometers southeast of Montreal. The major tenants are Le CSSS Haut-Richelieu-Rouville (CSSS), a community health center run by the provincial government, Provigo Distribution (operating as Maxi) and Bureau en Gros (part of the Staples chain). The loan sponsor is BTB Real Estate Investment Trust.

There were variances from criteria related to classes B and C for which the model output suggested that upgrades were possible. Fitch determined, however, that upgrades are not warranted at this time as there has been no significant improvement to the performance of the pool since issuance, the pool is highly concentrated by loan balance and sponsor, and some loans have yet to report two full years of operating performance.

RATING SENSITIVITIES

The Rating Outlook on class G is Negative due to the uncertainty regarding the operations and performance of the specially serviced loan. The Rating Outlooks on the senior classes are likely to remain Stable; although the transaction could further de-lever when three performing loans mature in 2017, upgrades may be limited as the pool is becoming more concentrated.

DUE DILIGENCE USAGE

No third party due diligence was provided or reviewed in relation to this rating action.

Fitch affirms and removes the following class from Rating Watch Negative and assigns a Negative Outlook as indicated:

--C$3.1 million class G at 'Bsf'; Outlook Negative.

Fitch affirms the following ratings:

--C$97.9 million class A-1 at 'AAAsf'; Outlook Stable;

--C$119 million class A-2 at 'AAAsf'; Outlook Stable;

--C$6.2 million class B at 'AAsf'; Outlook Stable;

--C$9.4 million class C at 'Asf'; Outlook Stable;

--C$8.2 million class D at 'BBBsf'; Outlook Stable;

--C$4.7 million class E at 'BBB-sf'; Outlook Stable;

--C$3.1 million class F at 'BBsf'; Outlook Stable.

Fitch does not rate the interest-only class X or the non-offered C$5.8 million class H certificate.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 16 Jun 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=882401

Exposure Draft: Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 Apr 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=878412

Global Structured Finance Rating Criteria (pub. 27 Jun 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=883130

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395

Related Research

IMSCI 2014-5 -- Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=877209

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1008589

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1008589

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160707006339/en/

Fitch Ratings
Primary Analyst
Jeffrey Diliberto
Director
+1-312-368-3268
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Committee Chairperson
R. Brook Sutherland
Senior Director
+1-312-606-2346
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: [email protected]

Source: Fitch Ratings

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• SR Alternative Credit Completes a $20 Million Senior Secured Financing for Subprime Auto Loan Originator
• Calix Expands SmartHome With ScamWatchIQ and ScamPRO, Helping Service Providers Grow Loyalty and ARPU by Protecting Subscribers From Fraud and Identity Theft
• Andrew Peller Limited Receives Final Order Approving Arrangement With Fairfax Financial Holdings Limited