Fitch Affirms MSCI 2007-XLF

NEW YORK--()--Fitch Ratings has affirmed 11 classes of Morgan Stanley Capital I Trust series 2007-XLF (MSCI 2007-XLF). A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

Since the last rating action, the $133 million Crowne Plaza Times Square loan paid off in full. The portfolio is extremely concentrated with only two loans remaining - the HRO Hotel Portfolio loan (92% of the pooled portion) and the former Le Meridien Resort (8%).

The HRO Hotel Portfolio loan is secured by five full-service hotels (1,939 keys) located in Stamford, CT; Sonoma, CA; Norfolk, VA; Atlanta, GA; and Southfield, MI. The hotels are currently under the Marriott, Hilton, Sheraton, and Westin flags. Performance expectations at origination have not been met. Per the TTM January 2015 STR reporting, the portfolio had a weighted average occupancy, ADR, and RevPAR of 71.2%, $125, and $90, respectively with the average RevPAR increasing 9% over the prior year. Average RevPAR penetration for the portfolio was below 100%, as of TTM January 2015. At its most recent final extended maturity date of October 2014, the loan failed to repay and the special servicer granted an additional one-year extension through October 2015. The loan returned to the master servicer in January 2015.

The other remaining loan is the specially serviced former Le Meridien Resort, now known as the Sandos Cancun Luxury Experience Resort & Spa, an all-inclusive 213 room hotel located in Cancun, Mexico. At maturity in October 2014, the borrower was unable to fully pay off the loan, but made a $10 million principal pay down. The lender approved forbearance through October 2015, which requires amortization of principal from excess cash flow. While property performance has struggled over the past few years, cash flow as of year to date (YTD) September 2014 has improved to a servicer reported normalized net cash flow of $1.3 million compared with negative normalized cash flow at year end 2013. YTD September 2014 occupancy was reported at 78% compared to 50.7% at YE 2013.

RATING SENSITIVITIES

The Rating Outlooks for classes C through E are expected to remain Stable. Class F through H and the M-HRO rake class could be subject to further downgrades should the underlying assets' performance continue to decline and/or should additional losses be realized.

Fitch affirms the following classes:

--$255,786 class C at 'Asf'; Outlook Stable;

--$25.2 million class D at 'BBBsf'; Outlook Stable;

--$27.4 million class E at 'BBsf'; Outlook Stable;

--$26.3 million class F at 'BBsf'; Outlook Negative;

--$26.6 million class G at 'CCCsf'; RE 35%;

--$13.5 million class H at 'CCCsf'; RE 0%;

--$10.4 million class J at 'Dsf'; RE 0%;

--$0 class K at 'Dsf'; RE 0%;

--$0 class L at 'Dsf'; RE 0%;

--$5.2 million class M-HRO at 'CCCsf'; RE 0%;

--$7.9 million class N-HRO at 'Dsf'; RE 0%.

Classes A-1 through B, M-MPK, M-STR, N-MPK, and N-STR have paid in full. Class M-BRL is not rated.

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

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (March 31, 2015);

--'Criteria for Rating Caps and Limitations in Global Structured Finance Transactions' (May 28, 2014);

--'Criteria for Analyzing Large Loans in US Commercial Mortgage Transactions' (March 20, 2015).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864268

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748781

Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=862818

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=984672

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Contacts

Fitch Ratings
Primary Analyst
Stacey McGovern
Director
+1-212-908-0722
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Stacey McGovern
Director
+1-212-908-0722
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com