OREANDA-NEWS. Fitch Ratings has affirmed three classes of NLY Commercial Mortgage Trust 2014-FL1 commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations are based on the continuing stabilization of the underlying collateral pool, which includes only 10 loans secured by 23 properties. Over half of the pool and, in particular, the largest loan, are secured by properties that have not yet stabilized. Fitch anticipated that borrowers would need time to actualize their respective business plans in its original analysis. While the majority of the loans appear to be on track with their stabilization plans, Fitch has designated four loans (20.2%) as Fitch Loans of Concern. There are currently no specially serviced loans.

As of the January 2015 distribution date, there has been no paydown to any of the classes.

The largest loan in the pool (28.8%) is secured by the Optima Chicago, a recently constructed 325-unit high end rental apartment project located in the Streeterville neighborhood of downtown Chicago, IL. The collateral also includes 178 parking spaces and 20,440 square feet (sf) of commercial space. Leasing commenced on the apartment units in July 2013.

The sponsors' original business plan was to capitalize on the strong demand for newly built, luxury apartments in downtown Chicago by delivering a high-quality building well located in an affluent neighborhood with multiple demand drivers. Per Reis (3Q'14), the property's Gold Coast sub-market had the highest asking rents among Chicago's many submarkets and a reported vacancy rate of only 5% for properties built after 2009. Initially, the sponsors projected that 100% occupancy would be achieved in June 2015, implying a pace of approximately 15 units absorbed per month. As of the December 2014 rent roll, the apartment component was 83% occupied compared to 28% occupied in December 2013. Per the borrower, the property is expected to stabilize by the end of this quarter.

Principal repayment for Optima Chicago will pay the certificates on a pro rata basis, subject to performance triggers, including 50% of the pool based on the cut-off date pool balance being outstanding at the time of repayment.

The second largest loan in the pool (12.8%) is secured by the Ritz Carlton - Denver, a 202-key full-service luxury hotel located in the Denver Central Business District (CBD). Amenities include Elway's Restaurant, 12,700 sf of meeting and event space, an on-site fitness center and full-service spa, and a private club floor, which includes a staffed lounge area and a business center.

Since the current borrower acquired the property in 2010, there had been steady revenue per available room (RevPAR) growth at the property. However, at securitization, the sponsor anticipated that the property would be able to stabilize at a RevPAR that was 8% higher than the trailing 12 month (TTM) October 2013 level; an assumption that was supported by a five-year \$10.1 million planned capital improvement plan.

Over the last year, the property has shown continued RevPAR improvement. Per the November 2014 STR report, TTM RevPAR was approximately 17% higher than the TTM October 2013 level; and well in excess of the borrower's projected growth rate. RevPAR penetration was 144.8%. Renovation work is ongoing.

The largest Fitch Loan of Concern (9.6%) is secured by Atrium One, an 18-story CBD office building located in Cincinnati, OH. The sponsors purchased the building in a sale leaseback from Convergys, which is the second largest tenant occupying 30% of the space at below market rents through 2028. The third largest tenant, NetCracker (10%), a former subsidiary of Convergys, has a significantly above-market rent, and a lease expiration in 2017 with rights to early termination.

The business plan at securitization was to lease up existing vacant space and transition through upcoming lease rollover by renewing or replacing maturing tenants at market rental levels. As of the September 2014 rent roll, occupancy had dropped to 79% compared to 84%, as of July 31, 2013. The decrease is primarily attributable to continued contraction by Netcracker, which was anticipated at securitization. Over the past year, Netcracker, has reduced its space by approximately 28,000 sf.

The most recent servicer reported cash flow continues to support this loan. While Fitch expected some drop in occupancy at the subject; there has been no significant leasing activity reported.

The other Fitch Loans of Concern are Tech Ridge Office Park (4.4%), which has significant upcoming lease roll; and the Ambassador Hotel (3.9%) and Hotel Modern (2.3%), which are both New Orleans boutique hotels that are behind on their stabilization plans.

RATING SENSITIVITIES

The Rating Outlook for all classes remains Stable. Due to the recent issuance of the transaction and still stabilizing performance of many of the assets, Fitch does not foresee near term positive or negative ratings migration to the rated classes. Fitch will continue to monitor performance of the individual assets, and in particular the four Fitch Loans of Concern.

Fitch expects to publish a Focus Performance Report on the transaction within the next two weeks.

Additional information on rating sensitivity is available in the report 'NLY Commercial Mortgage Trust 2014-FL1' (April 15, 2014), available at 'www.fitchratings.com'.

Fitch affirms the following classes as indicated:

--\$178.79 million class A at 'AAAsf', Outlook Stable;
--\$25.47 million class B at 'AA-sf', Outlook Stable;
--\$17.48 million class C at 'A-sf', Outlook Stable.

Fitch does not rate the class D, E, F, G or X certificates.

A comparison of the transaction's Representations, Warranties, and Enforcement (RW&E) mechanisms to those of typical RW&Es for the asset class is available in the following report:

--'NLY Commercial Mortgage Trust 2014-FL1-- Appendix' (April 15, 2014).