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TEXT-Fitch cuts 7 classes Morgan Stanley Capital I Trust certs
September 13, 2012 / 5:11 PM / in 5 years

TEXT-Fitch cuts 7 classes Morgan Stanley Capital I Trust certs

(The following statement was released by the rating agency)

Sept. 13 - Fitch Ratings has downgraded seven and affirmed 15 classes of Morgan Stanley Capital I Trust, commercial mortgage pass-through certificates, series 2007-TOP27 (MSCI 2007-TOP27). A detailed listing of rating actions follows at the end of this release. The downgrades reflect realized losses and an increase in Fitch-modeled losses across the pool since the last review. Fitch modeled losses of 4.7% for the remaining pool (modeled losses are 5.9% of the original pool, including losses incurred to date). The increase in modeled losses is attributable to updated values on specially-serviced loans and the deterioration in performance on other Fitch Loans of Concern not in the top 15. The smaller-than-average class sizes make the junior classes more susceptible to downgrades. Classes K through P have been reduced to zero and class J impacted due to realized losses. As of the August 2012 distribution date, the pool’s aggregate principal balance has been reduced by 15.4% (to $2.30 billion from $2.72 billion at issuance), of which 13.5% was due to paydowns and 1.9% was due to realized losses. There are no defeased loans. Fitch has designated 49 loans (19%) as Fitch Loans of Concern, which includes 10 specially-serviced loans (4.3%). Of the loans in special servicing, two loans (1.2%) were real-estate owned (REO), three loans (1.9%) were in foreclosure, one loan (0.2%) was greater than 90 days delinquent, one loan (0.2%) was 30 days delinquent, two loans (0.6%) were non-performing matured balloons, and one loan (0.2%) remains current. The largest contributor to modeled losses is a specially serviced loan (0.6%) secured by a 141,667 square foot mixed-use property located in Glen Burnie, MD. The loan was transferred to special servicing in May 2009 due to the borrower’s failure to remit debt service payments. The asset became REO in March 2012. Property management is working on stabilizing the property and increasing occupancy. As of the July 2012 rent roll, the property was 64% occupied. The next largest contributor to modeled losses is a specially serviced loan (0.6%) initially secured by three supermarket-anchored retail properties totaling 193,566 square feet (sf) located in Aurora, Bridgeview, and Joliet, IL. The loan was transferred to special servicing in March 2009 due to payment default. The asset became REO in December 2010. One of the properties was sold in July 2012, while the other two are being marketed for sale, according to the special servicer. The two remaining properties are both fully vacant. The third contributor to modeled losses is a loan (1%) secured by two office buildings totaling 138,512 sf located in Reston, VA. At issuance, the combined occupancy was 100%. The property previously suffered occupancy declines due a prior tenant that initially occupied 37% of the total net rentable area (NRA) vacating upon its lease expiration and another tenant that reduced its NRA at the property. Occupancy has since improved to 95% as of June 2012 from 52% one year earlier due to one of the existing tenants at the property executing a lease in early 2012 for an additional 41% of the total portfolio NRA. The loan remains current. Fitch has downgraded the following classes as indicated: --$190.6 million class A-J to ‘Asf’ from ‘AAsf’; Outlook Negative; --$54.5 million class B to ‘BBB-sf’ from ‘BBBsf’; Outlook Negative; --$30.6 million class C to ‘Bsf’ from ‘BBsf’; Outlook Negative; --$30.6 million class D to ‘CCCsf’ from ‘Bsf’; RE 100%; --$23.8 million class E to ‘CCCsf’ from ‘B-sf’; RE 40%; --$23.8 million class F to ‘CCsf’ from ‘CCCsf’; RE 0%; --$30.6 million class G to ‘Csf’ from ‘CCsf’; RE 0%. In addition, Fitch has affirmed the following classes as indicated: --$256.9 million class A-1A at ‘AAAsf’; Outlook Stable; --$31.6 million class A-2 at ‘AAAsf’; Outlook Stable; --$137.4 million class A-3 at ‘AAAsf’; Outlook Stable; --$110 million class A-AB at ‘AAAsf’; Outlook Stable; --$1.1 billion class A-4 at ‘AAAsf’; Outlook Stable; --$172.3 million class A-M at ‘AAAsf’; Outlook Stable; --$100 million class A-MFL at ‘AAAsf’; Outlook Stable; --$23.8 million class H at ‘Csf’; RE 0%; --$1.6 million 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%; --$50.2 million class AW34 at ‘AAAsf’; Outlook Stable. Class A-1 has paid in full. Fitch does not rate class P. The rating on the interest-only class X was previously withdrawn. (For additional information on the withdrawal of the rating on class X, see ‘Fitch Revises Practice for Rating IO & Pre-Payment Related Structured Finance Securities’, dated June 23, 2010.) Contact: Primary Analyst Melissa Che Associate Director +1-212-908-9107 Fitch, Inc. One State Street Plaza New York, NY 10004 Committee Chairperson Christopher Bushart Senior Director +1-212-908-0606 Media Relations: Sandro Scenga, New York, Tel: +1 212-908-0278, Email: sandro.scenga@fitchratings.com. (Reporting By Hilary Russ)

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