DBRS Morningstar Confirms All Classes of MCAP CMBS Issuer Corporation, Series 2014-1

DBRS Limited (DBRS Morningstar) confirmed all classes of the Commercial Mortgage Pass-Through Certificates, Series 2014-1 issued by MCAP CMBS Issuer Corporation, Series 2014-1 as follows:

-- Class D at AAA (sf)
-- Class E at AAA (sf)
-- Class F at BBB (low) (sf)
-- Class G at B (sf)

All trends are Stable.

The rating confirmations reflect the current credit outlook on the remaining collateral. As of the December 2021 remittance, four of the original 32 loans remain in the pool with an aggregate principal trust balance of $16.1 million, representing a 92.8% collateral reduction since issuance. Three of the remaining loans, representing 79.5% of the current trust balance, are performing either in line with or above issuance expectations. All three loans are scheduled to mature in 2024; generally, refinancing prospects look favourable for these loans.

The fourth remaining loan, 1121 Centre Street NW loan (Prospectus ID#7, 20.5% of the pool), was formerly secured by a Class B mid-rise office building in Calgary. In October 2020, the property sold for $6.8 million, with proceeds from the sale used to pay down the trust loan, outstanding advances, and other fees. A balance of $3.3 million remained in the trust as of the December 2021 reporting; this balance is recourse to the borrowing entity and to the guarantor, Riaz Mamdani and IEC Ltd., for the full amount of the outstanding debt. A judgment was obtained against the corporate guarantor, IEC Ltd., in April 2021. In regard to the personal guarantee, Mamdani filed a consumer proposal where he declared zero assets. The issuer, MCAP, was subsequently approached by an entity related to one of the claimants with an offer to purchase the personal guarantee for $123,000. After reviewing all supporting documents presented by the trustee and discussing with the legal counsel, MCAP agreed to sell the personal guarantee for $123,000. Although the loan is structured with full recourse provisions, it is unknown if the sponsorship entity has the capital available to fulfill this obligation. In the event that the loan does realize a loss upon resolution, that loss would be absorbed by the nonrated first-loss bond in the capital stack.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

All ratings are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by DBRS Morningstar.

DBRS Morningstar provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Prospectus ID#7 – 1121 Centre Street NW (20.5% of the pool)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com. The platform includes issuer and servicer data for most outstanding CMBS transactions (including non-DBRS Morningstar rated), as well as loan-level and transaction-level commentary for most DBRS Morningstar-rated and -monitored transactions.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The principal methodology is North American CMBS Surveillance Methodology (March 26, 2021), which can be found on dbrsmorningstar.com under Methodologies & Criteria. For a list of the structured-finance-related methodologies that may be used during the rating process, please see the DBRS Morningstar Global Structured Finance Related Methodologies document, which can be found on dbrsmorningstar.com in the Commentary tab under Regulatory Affairs. Please note that not every related methodology listed under a principal structured finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482/baseline-macroeconomic-scenarios-application-to-credit-ratings.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info@dbrsmorningstar.com.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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