Fitch Affirms Morgan Stanley Capital I Trust, 2011-C2

CHICAGO--()--Fitch Ratings has affirmed all 12 classes of Morgan Stanley Capital I Trust 2011-C2 commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this release.

KEY RATINGS DRIVERS

The affirmations are based on the stable performance of the underlying collateral pool. As of the April 2013 remittance, there have not been any defaulted or specially serviced loans, and there are no Fitch Loans of Concern. There are two loans on the servicer's watchlist (9.0%); however, they are on the watchlist for borrower update issues and are not considered Fitch Loans of Concern.

The pool's aggregate principal balance has been paid down by 4.6% to $1.159 billion from $1.214 billion at issuance. Based on full year financial statements for the 51% of loans that reported, the pool's overall net operating income (NOI) has improved 9.9% since issuance.

RATINGS SENSITIVITY

All classes maintain Stable Outlooks. Due to the recent issuance of the transaction and the stable performance, Fitch does not foresee positive or negative ratings migration until a material economic or asset level events change the transaction's overall portfolio-level metrics. Additional information on rating sensitivity is available in the report 'Morgan Stanley Capital I Trust, 2011-C2' (June 28, 2011), available at www.fitchratings.com.

Fitch is monitoring the leasing on the 12th largest loan of the pool (1.8%). The loan is collateralized by Riverside 5, a 121,863 square foot (sf) mid-rise suburban office located in Frederick, MD. The subject is located adjacent to the National Cancer Institute Research Facility and the tenant base consists of General Services Administration entities and governmental contractors. Fitch stressed the subject's net operating income (NOI) and increased the capitalization rate to account for the potential for tenant rollover due to the termination rights in the building's major tenant leases as well as the economic weakness in the Frederick submarket. The suburban DC market has a number of submarkets, including Frederick, with vacancy rates approaching 20%. Fitch will monitor the building's occupancy rates as federal entities continue to look for cost savings due to a decrease in government expenditures.

The largest loan of the pool (12.6%) is secured by Deerbrook Mall, a 1,203,612 sf regional mall, of which 554,461 sf is collateral for the loan, located in Humble, TX. The mall features four non-collateral anchors, including Dillard's, Macy's, Sears, and JC Penney. The subject serves a large trade area that encompasses a population of more than 500,000 with an average household income of $68K. The closest competitor is another regional mall that is owned by the same sponsor more than 21 miles to the southwest. The occupancy as of September 2013 was 99% versus 98% at issuance and the third-quarter 2013 reported debt service coverage ratio (DSCR) was 1.79 times (x). The sponsor of the loan is General Growth Properties. The property's NOI has increased 11.6% since issuance. The property's rent roll is stable with only major tenant lease, AMC Theaters, scheduled to expire in the within the next two years.

The second largest loan (11.9%) is secured by a 1,125,747 sf regional mall, Ingram Park Mall, located in San Antonio, TX. The mall's anchors, none of which are included in the loan's collateral, are Dillard's, Dillard's Home Center, Sears, JC Penney, and Macy's. The mall benefits from its proximity to the Lackland Airforce Base and Westover Hills master-planned community. The mall's occupancy as of September 2013 was 89% with a DSCR of 1.69x. The property continues to perform well and net operating income has increased 11.9% since issuance. The tenant base is stable with no more than 7% of the net rentable area (NRA) rolling over the course of the next 4 years. The sponsor of the loan is Simon Property Group.

Fitch has affirmed the following classes as indicated:

--$11.5 million class A-1 at 'AAAsf'; Outlook Stable;

--$363.5 million class A-2 at 'AAAsf'; Outlook Stable;

--$89 million class A-3 at 'AAAsf'; Outlook Stable;

--$439.5 million class A-4 at 'AAAsf'; Outlook Stable;

--$45.5 million class B at 'AAsf'; Outlook Stable;

--$50.1 million class C at 'Asf'; Outlook Stable;

--$31.9 million class D at 'BBB+sf'; Outlook Stable;

--$50.1 million class E at 'BBB-sf'; Outlook Stable;

--$15.2 million class F at 'BB+sf'; Outlook Stable;

--$12.1 million class G at 'BBsf'; Outlook Stable;

--$15.2 million class H at 'B-sf'; Outlook Stable;

--$936 million class X-A at 'AAAsf'; Outlook Stable;

Fitch does not rate class J and X-B.

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:

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 -- Effective Dec. 18, 2012 to Dec. 11, 2013

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=827149

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
Jay Bullie, +1-312-368-2079
Associate Director
70 W. Madison Street
Chicago, IL 60602
or
Committee Chairperson:
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations:
Alyssa Castelli, New York, +1 212-908-0540
alyssa.castelli@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst
Jay Bullie, +1-312-368-2079
Associate Director
70 W. Madison Street
Chicago, IL 60602
or
Committee Chairperson:
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations:
Alyssa Castelli, New York, +1 212-908-0540
alyssa.castelli@fitchratings.com