Fitch Downgrades 3 Classes of MSCI 2008-TOP29; Affirms Senior Classes

NEW YORK--()--Fitch Ratings has downgraded three classes of Morgan Stanley Capital I Trust (MSCI), series 2008-TOP29. A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The downgrades were the result of higher modeled losses on performing loans with declines in performance indicative of a higher probability of default. Fitch modeled losses of 4.4% of the remaining pool. Expected losses of the original pool are at 4.9%, including losses realized to date. Fitch designated 21 loans (19% of the pool balance) as Fitch Loans of Concern. No loans were in special servicing as of the November distribution date. Although 80% of the loans are reporting a debt service coverage ratio (DSCR) greater than 1.20x, approximately half of the pool has Fitch loan-to-values greater than 90%.

As of the November 2013 distribution date, the pool's aggregate principal balance has been reduced by approximately 9.4% (including 1% in realized losses) to $1.12 billion from $1.23 billion at issuance. One loan is defeased (0.6% of the pool). Interest shortfalls are affecting the non-rated class P.

RATING SENSITIVITIES

The Negative Rating Outlooks reflect the likelihood of a future downgrade should values deteriorate further on highly leveraged loans. While no loans are currently in special servicing, if a significant number of loans transfer to the special servicer, additional downgrades may be possible due to the pool's high leverage and the relatively small tranche sizes of the subordinate classes. In addition, Fitch is modeling 77% of the pool as a maturity default, indicating a high refinance risk based on Fitch's stressed refinance constants.

The largest contributor to Fitch modeled losses is a 98,772 square foot (sf) office property (2% of the pool balance) located in Valencia, CA. The loan remains current; however, the property is approximately 30% occupied, as the largest tenant vacated. The remainder of the space has several tenants that occupy less than 1,000 to 6,000 sf each.

The second-largest contributor to modeled losses is backed by a 140,204 sf grocery anchored retail center (1.5% of the pool balance) in Fredericksburg, VA. The property has experienced cash flow issues due to a decline in occupancy; however, it remains current and per the most recent rent roll, remains anchored by a Giant grocery store on a long-term lease.

The third-largest contributor to modeled losses is secured by a 106,674 sf anchored retail property (1.2% of the pool balance) in Covington, WA. The Kohl's anchored retail center has experienced cash flow issues due to a decline in rents although occupancy remains high at a reported 97% as of June 2013.

Fitch downgrades the following classes and revises Ratings Outlooks as indicated:

--$10.8 million class C to 'BBBsf' from 'Asf'; Outlook to Stable from Negative;

--$1.5 million class J to 'CCsf' from 'CCCsf', RE 0%;

--$1.5 million class L to 'Csf' from 'CCsf', RE 0%.

Fitch affirms the following classes as indicated:

--$52.6 million class A-3 at 'AAAsf'; Outlook Stable;

--$38.9 million class A-AB at 'AAAsf'; Outlook Stable;

--$629.6 million class A-4 at 'AAAsf'; Outlook Stable;

--$75 million class A-4FL at 'AAAsf'; Outlook Stable;

--$123.4 million class A-M at 'AAAsf'; Outlook Stable;

--$72.5 million class A-J1 at 'AAsf'; Outlook Stable;

--$20.1 million class B at 'Asf'; Outlook Stable;

--$21.6 million class D at 'BBB-sf'; Outlook Negative;

--$12.3 million class E at 'BBsf'; Outlook Negative;

--$13.9 million class F at 'Bsf'; Outlook Negative;

--$13.9 million class G at 'CCCsf', RE 15%;

--$10.8 million class H at 'CCCsf', RE 0%;

--$4.6 million class K at 'CCsf', RE 0%;

--$1.5 million class M at 'Csf', RE 0%.

--$4.6 million class N at 'Csf', RE 0%;

--$4.6 million class O at 'Csf', RE 0%.

Fitch does not rate class P, which has been reduced to $3.6 million from $15.2 million due to realized losses. Classes A-1 and A-2 are paid in full. Fitch previously withdrew the rating on the interest-only class X.

Additional information on Fitch's amended criteria for analyzing recent vintage U.S. CMBS is available in the Dec, 11, 2013 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. 11, 2013).

Applicable Criteria and Related Research:

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

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961

Global Structured Finance Rating Criteria

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

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=812000

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
Jeffrey Diliberto
Director
+1-212-908-9173
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Sandro Scenga, +1-212-908-0278 (New York)
sandro.scenga@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Jeffrey Diliberto
Director
+1-212-908-9173
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Sandro Scenga, +1-212-908-0278 (New York)
sandro.scenga@fitchratings.com