CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed 15 classes of Morgan Stanley Capital I Trust's commercial mortgage pass-through certificates series 2005-TOP17. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The affirmations reflect significant paydown and increased credit enhancement since Fitch's last rating action . Despite the significant paydown upgrades are not warranted due to pool concentrations and adverse selection, with only 24 loans remaining. Fitch modeled losses of 38.1% of the remaining pool; expected losses on the original pool balance total 7.5%, including $5.9 million (0.6% of the original pool balance) in realized losses to date. Fitch has designated nine loans (48.7%) as Fitch Loans of Concern, which includes four specially serviced assets (40.1%).
As of the November 2014 distribution date, the pool's aggregate principal balance has been reduced by 82%, to $176.8 million from $980.8 million at issuance. Per the servicer reporting, three loans (14.4% of the pool) are defeased. Interest shortfalls are currently affecting classes D through P.
The largest contributor to expected losses remains the Coventry Mall (36% of the pool). The 796,194 square foot (sf) regional mall is located in Pottstown, PA and was 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. Sears vacated later in 2012 and the loan returned to the special servicer in in December 2012 due to imminent monetary default. Foreclosure occurred in October 2013. The asset is real estate owned (REO) and the servicer is addressing immediate deferred maintenance items. Performance of the mall has declined further when Ross Dress for Less vacated in January 2014. Occupancy was reported to be 62% as of August 2014. Fitch remains concerned about the ultimate recovery prospects for this asset.
The next largest contributor to expected losses is secured by a 94,193 sf grocery-anchored shopping center located in Benson, AZ (3.15%). 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. All repairs have now been completed and the grocery tenant has recently exercised its five year extension option. Occupancy was reported to be 75% as of July 2014. The property is currently being marketed for sale.
The third largest contributor to expected losses is secured by a 230,600 sf warehouse/distribution center located in Weston, FL (3.54%). The property has been 100% vacant since 2012, but loan payments have been current. Fitch applied a dark value analysis to estimate an expected recovery given the current vacancy, making assumptions for market rents, carrying costs, and re-tenanting costs.
RATING SENSITIVITIES
The Rating Outlooks on classes A-5 and A-J are Stable due to increasing credit enhancement and continued paydown. The Rating Outlook on class B remains Negative due to the uncertainty of losses from the specially serviced loans and the thinness of classes subordinate to the B class.
Fitch affirms the following classes but revises Rating Outlooks and REs as indicated:
--$16 million class A-5 at 'AAAsf', Outlook to Stable from Negative;
--$74.8 million class A-J at 'BBBsf', Outlook to Stable from Negative;
--$7.4 million class C at 'CCCsf', RE 0%;
--$11 million class D at 'CCsf', RE 0%.
Fitch affirms the following classes as indicated:
--$20.8 million class B at 'Bsf', Outlook Negative;
--$9.8 million class E at 'Csf', RE 0%;
--$6.1 million class F at 'Csf', RE 0%;
--$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. 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' (Aug. 4, 2014);
--'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=754389
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=934775
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