News Column

Fitch Downgrades 3 Classes of MSCI 2007-TOP27

August 1, 2014

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has downgraded three classes and affirmed 18 classes of Morgan Stanley Capital I Trust, commercial mortgage pass-through certificates, series 2007-TOP27 (MSCI 2007-TOP27). A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The downgrades are due to an increase in expected losses for the pool. Fitch modeled losses of 6.4% of the remaining pool; expected losses on the original pool balance total 7.8%, including $85.4 million (3.1% of the original pool balance) in realized losses to date. Fitch has designated 51 loans (26.3%) as Fitch Loans of Concern, which includes four specially serviced assets (4.1%).

As of the July 2014 distribution date, there are 186 loans remaining from the original 234 loans and the pool's aggregate principal balance has been reduced by 24.9% to $2.08 billion from $2.77 billion at issuance. Per the servicer reporting, one loan (0.2% of the pool) is defeased. Interest shortfalls are currently affecting classes E through P.

The largest contributor to expected losses is the Springfield Hotel Portfolio (III) (1.8% of the pool). The original loan was secured by two hotels that are attached by a walkway, have a total of 428 rooms and are located in Springfield, IL. The hotels are flagged as a Crowne Plaza with 288 rooms and a Holiday Inn Express with 140 rooms. The loan was transferred to the special servicer in October 2011 for imminent default and the property became real estate-owned (REO) in April 2013.

Fitch's expected loss has increased significantly since the previous rating action due to a substantial decline in the value of the two properties. The hotels have been marketed since January 2014. Additionally, the Franchise License Agreements that were set to expire in September 2014 have been finalized and executed with Intercontinental Hotel Group. According to a recent STR report, the hotels are performing in line with their competitive sets, but the market remains soft.

The next largest contributor to expected losses is the specially-serviced 791 Park of Commerce loan (1.4%), which is secured by a 138,132 square foot (sf) office property in Boca Raton, FL. The loan transferred to special servicing in February 2013 due to imminent payment default. The borrower had failed to pay the required reserve payment triggered in December 2012 as a result of the largest tenant's failure to renew its lease 24 months prior to expiration. The largest tenant has since vacated the 88,729 sf space (64% of NRA). However, it continues to pay rent through the end of the year, leaving the property 92% leased and 28% physically occupied. The loan is in process of foreclosure.

The third largest contributor to expected losses is a specially-serviced portfolio (0.7%) initially secured by three grocery anchored retail properties with 193,566 sf located in Aurora, Bridgeview, and Joliet IL. The loan was transferred to the special servicer in March 2009 due to payment default and the asset became real estate owned (REO) in December 2010. The Aurora property sold in July 2012 for $2.25 million and the Bridgeview property sold in August 2013 for $1.8 million. There is an interested party for the Joliet property and negotiations are ongoing.

The transaction also includes a non-pooled trust component secured by the leased fee of 330 West 34th Street, a 46,412 sf parcel of land ground leased on a triple-net basis to Vornado Realty Trust until December 2021. Vornado has been the only tenant at the property since 1986 and is currently in its first extension option, with four options totaling 128 years remaining. The parcel is improved with an 18-story, 636,915 sf office building with retail at street level.

RATING SENSITIVITIES

The Rating Outlooks on classes A-1A through A-MFL remain Stable due to increasing credit enhancement and continued pay down. The Rating Outlooks on classes A-J and B remain Negative due to the declining value and uncertainty surrounding the resolution of the Springfield Hotel Portfolio (III). Distressed classes (those rated below 'B') may be subject to downgrades as losses are realized or if realized losses are greater than Fitch's expectations.

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

--$190.6 million class A-J to 'BBB-sf' from 'BBBsf', Outlook Negative;

--$54.5 million class B to 'Bsf' from 'BBsf', Outlook Negative;

--$30.6 million class C to 'CCCsf' from 'Bsf', RE 55%.

Fitch affirms the following classes as indicated:

--$255.2 million class A-1A at 'AAAsf', Outlook Stable;

--$19 million class A-3 at 'AAAsf', Outlook Stable;

--$31.1 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;

--$30.6 million class D at 'CCCsf', RE 0%.

--$23.8 million class E at 'CCsf', RE 0%;

--$23.8 million class F at 'Csf', RE 0%;

--$23.4 million 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%;

--$50.2 million class AW34 at 'AAAsf', Outlook Stable.

The class A-1 and A-2 certificates have paid in full. Fitch does not rate the class P certificates. 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', available at 'www.fitchratings.com' or in the link at the end of the press release.

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

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (May 20, 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=843742

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.



Fitch Ratings, Inc.

Primary Analyst

Darren Liss, +1-212-908-0753

Director

Fitch Ratings, Inc.

33 Whitehall Street

New York, NY 10004

or

Committee Chairperson

Mary MacNeill, +1-212-908-0785

Managing Director

or

Media Relations

Sandro Scenga, +1-212-908-0278

sandro.scenga@fitchratings.com

Source: Fitch Ratings


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