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Fitch Downgrades Three Distressed Classes of MSCI 2007-TOP25

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has downgraded three distressed classes and affirmed 15 classes of Morgan Stanley Capital I Trust 2007-TOP25 (MSCI 2007-TOP25). A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

Fitch modeled losses of 8.9% of the remaining pool; expected losses on the original pool balance total 12.1%, including $75.7 million (4.9% of the original pool balance) in realized losses to date. Fitch has designated 51 loans (32.9%) as Fitch Loans of Concern, which includes 11 specially serviced assets (5.3%). Approximately 42% of the pool consists of loans secured by retail properties.

As of the June 2014 distribution date, the pool's aggregate principal balance has been reduced by 18.8% to $1.26 billion from $1.55 billion at issuance. Per the servicer reporting, five loans (4.5% of the pool) are defeased. Interest shortfalls are currently affecting classes D through P.

The largest contributor to expected losses is the Mount Pleasant Towne Centre loan (7.5% of the pool), which is the largest loan in the pool. The collateral consists of a 443,521 square foot (sf) retail center located in Mount Pleasant, SC. As of the December 2013 rent roll, the property was 97.6% occupied with approximately 15% roll over the next year and 25% roll prior to the loan's maturity in December 2016. Performance has been stable over the past two years with a servicer reported DSCR of 1.38x for YE 2013 and 1.41x for YE 2012; however, the loan remains over leveraged.

The next largest contributor to expected losses is the Shoppes at Park Place loan (5.6%), which is secured by a 325,270 sf retail center located in Pinellas Park, FL. As of the December 2013 rent roll, the property was 100% occupied. However, nearly half of the total property square footage has lease expirations prior to the loan's maturity in January 2017. Further, the average current rent at the property is above market levels.

The third largest contributor to expected losses is the specially-serviced Providian Bancorp Office / Data Center loan (1.6%), which is secured by a vacant office property located in Arlington, TX. The loan transferred to the special servicer after the sole tenant vacated at its lease maturity in August 2013. A sale of the property is currently being pursued.

RATING SENSITIVITIES

Rating Outlooks on classes A-1A through A-3 remain Stable due to increasing credit enhancement and continued pay down. Rating Outlook on Class AM remains Negative due to the possibility of further negative credit migration of the underlying collateral. The distressed classes are subject to further downgrade as losses are realized.

Fitch downgrades the following classes and assigns or revises Recovery Estimates (REs) as indicated:

--$27.2 million class B to 'CCsf' from 'CCCsf'; RE 0%;

--$11.7 million class C to 'CCsf' from 'CCCsf'; RE 0%;

--$25.3 million class D to 'Csf' from 'CCsf'; RE 0%;

Fitch affirms the following classes as indicated:

--$125.8 million class A-1A at 'AAAsf'; Outlook Stable;

--$7.5 million class A-AB at 'AAAsf'; Outlook Stable;

--$784.4 million class A-3 at 'AAAsf'; Outlook Stable;

--$155.5 million class A-M at 'Asf'; Outlook Negative;

--$110.8 million class A-J at 'CCCsf'; RE 75%.

--$11.7 million class E at 'Csf'; RE 0%;

--$2 million class F at 'Dsf'; RE 0%;

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

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

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

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

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

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

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

--$0 class O at 'Dsf'; RE 0%.

Fitch does not rate class P. Fitch previously withdrew the rating on the interest-only class X 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' (July 16, 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=748821

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=840288

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