Kroll Bond Rating Agency Assigns Preliminary Ratings to JPMCC 2014-INN

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Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to the JPMCC 2014-INN transaction (see ratings list below). JPMCC 2014-INN is a CMBS single borrower transaction that is collateralized by a $635.0 million, floating rate loan that was originated by JPMorgan Chase Bank, National Association. The loan has an initial two year term with three, one-year extension options. Proceeds from the mortgage loan, along with $205.0 million of mezzanine financing and approximately $208.0 million of new cash equity contributed by the loan sponsor, were used to facilitate the acquisition of the majority interest in a portfolio of 47 hospitality assets.

The loan is secured by the borrowers’ fee simple interests in 46 hospitality properties and leasehold interest in one hospitality property. The properties consists of 36 extended-stay properties (74.6%), nine limited-service properties (20.6%) and two full-service properties (4.8%) located in 30 different MSAs in 16 states. The properties are operated under flags including Residence Inn by Marriott (30 properties, 60.8%), Hyatt House (five properties, 13.0%), Hampton Inn (five properties, 9.8%), Courtyard by Marriott (three properties, 7.2%), Westin (one property, 3.7%), Sheraton Four Points (one property, 3.6%), Sheraton (one property, 1.1%) and TownePlace Suites by Marriott (one property, 0.8%).

KBRA’s analysis of the transaction included a detailed evaluation of the properties’ cash flows using our CMBS Property Evaluation Guidelines, and the application of our CMBS Single Borrower & Large Loan Rating Methodology. For the purposes of our analysis, we determined KBRA net cash flow (KNCF) for each asset, and applied KBRA capitalization rates to each property’s KNCF to determine property value. KBRA Adjusted this value to give partial credit for the upfront capital improvement reserves in the amount of $80.25 million that were funded into a reserve account at loan origination. The weighted average variance to the issuer’s NCF was 1.1%, and the weighted average value variance to each property’s third party appraisal values was 32.7%. The analysis produced an aggregate KBRA value of $707.8 million and an in trust KLTV of 89.7%.

For further details on KBRA’s analysis of the transaction, please see our Pre-Sale Report, entitled JPMCC 2014-INN, which was published today at

The preliminary ratings are based on information known to KBRA at the time of this publication. Information received subsequent to this release could result in the assignment of final ratings that differ from the preliminary ratings.

Preliminary Ratings Assigned: JPMCC 2014-INN

Class     Expected Rating     KLTV     Balance (US$)
A     AAA (sf)     30.1%     213,240,000
X-CP*     AAA (sf)     N/A     508,000,000
X-EXT*     AAA (sf)     N/A     635,000,000
B     AA- (sf)     41.1%     77,760,000
C     A- (sf)     49.3%     57,700,000
D     BBB-(sf)     61.0%     83,300,000
E     BB-(sf)     79.0%     127,200,000
F     B(sf)     89.7%     75,800,000

*Balance represents notional amount.


17g-7 Disclosure:

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report entitled JPMCC 2014-INN 17g-7 Disclosure Report.

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Related publications:
CMBS Property Evaluation Guidelines, published June 10, 2011
CMBS Single Borrower & Large Loan Rating Methodology, published August 8, 2011

About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

Kroll Bond Rating Agency
Michael B. Brown, 646-731-2307
Keith Kockenmeister, 646-731-2349
Anna Hertzman, 646-731-2367
Robin Regan, 646-731-2358


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