Fitch Downgrades 6 Classes of MSCI 2005-TOP17

NEW YORK--()--Fitch Ratings has downgraded six classes and affirmed nine classes of Morgan Stanley Capital I Trust's commercial mortgage pass-through certificates, series 2005-Top 17. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The downgrades are due to an increase in modeled losses, particularly from the specially serviced loans. Fitch modeled losses of 9.4% of the remaining pool; expected losses on the original pool balance total 7.2%, including $3.2 million (0.3% of the original pool balance) in realized losses to date. Fitch has designated 25 loans (27.9% of the pool) as Fitch Loans of Concern, which includes five specially serviced assets (10.8% of the pool).

As of the November 2013 distribution date, the pool's aggregate principal balance has been reduced by 26.9% to $717.4 million from $980.8 million at issuance. Per the servicer reporting, six loans (5.8% of the pool) are defeased. Interest shortfalls are currently affecting classes E through P.

The largest contributor to expected losses is the Coventry Mall (8.9% of the pool); a 796,194 square foot (sf) regional mall located in Pottstown, PA. The subject previously transferred to special servicing in February 2011. The loan was modified in January 2012 and bifurcated into A/B notes. The loan was returned to the master servicer in April 2012 after the borrower made three consecutive payments under the modified terms. Since then, the loan returned to the special servicer in December 2012 due to imminent monetary default and foreclosure occurred in October 2013. The asset is now REO and the servicer is addressing immediate deferred maintenance items. Occupancy was approximately 68% as of July 2013 and an additional 13% of the NRA rolls in 2014. Leasing is in process with preliminary interest in vacant anchor spaces (former Sears and Carmike Cinemas).

The next largest contributor to expected losses is a 94,193 sf grocery-anchored shopping center located in Benson, AZ (0.8% of the pool). The loan transferred to the special servicer in February 2009 due to imminent payment default as a result of occupancy decline and required structural repairs. Foreclosure occurred in January 2012. Strategy is to sell the property upon completion of all pending repairs. Occupancy was approximately 76% as of June 2013.

RATING SENSITIVITY

The Rating Outlooks of the remaining classes are negative due to increasing expected losses and the thinness of classes subordinate to the A-5 class. Should loans not payoff at their respective maturity dates and realized losses increase, downgrades are possible. The distressed classes (those rated below 'B') may be subject to downgrades as losses are realized.

Fitch downgrades the following classes:

--$74.8 million class A-J to 'BBBsf' from 'Asf', Outlook to Negative from Stable;

--$20.8 million class B to 'Bsf' from 'BBsf', Outlook to Negative from Stable;

--$7.4 million class C to 'CCCsf' from 'BBsf', RE 100%;

--$11 million class D to 'CCsf' from 'CCCsf', RE 10%;

--$9.8 million class E to 'Csf' from 'CCCsf', RE 0%;

--$6.1 million class F to 'Csf' from 'CCsf', RE 0%.

Fitch affirms the following classes:

--$553.8 million class A-5 at 'AAAsf', Outlook to Negative from Stable.

--$7.4 million class G at 'Csf', RE 0%;

--$7.4 million class H at 'Csf', RE 0%;

--$2.5 million class J at 'Csf', RE 0%;

--$3.7 million class K at 'Csf', RE 0%;

--$3.7 million class L at 'Csf', RE 0%;

--$1.2 million class M at 'Csf', RE 0%;

--$1.2 million class N at 'Csf', RE 0%;

--$2.5 million class O at 'Csf', RE 0%.

The class A-1, A-2, A-3, A-4 and A-AB certificates have paid in full. Fitch does not rate the class P certificates. Fitch previously withdrew the ratings on the interest-only class X-1 and X-2 certificates.

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 18, 2012 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at 'www.fitchratings.com' under the following headers:

Structured Finance >> CMBS >> Criteria Reports

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (May 24, 2013);

--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 18, 2012).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=696969

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=810616

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.

Contacts

Fitch Ratings
Primary Analyst
Martin Nunnally, +1-212-908-0871
Associate Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
sandro.scenga@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Martin Nunnally, +1-212-908-0871
Associate Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
sandro.scenga@fitchratings.com