DBRS Confirms 9, Downgrades 14 Classes of Morgan Stanley Capital I Trust, Series 2007-TOP 27

DBRS has today downgraded Classes A-J through O in the Morgan Stanley Capital I Trust, Series 2007-TOP27 transaction. In addition, DBRS has confirmed Classes A-1 through A-MFL, as well as the notional Class X.

Classes A-1 through A-J and Classes F through O, including notional Class X, have Stable trends. Classes B through E have Negative trends.

The downgrades are reflective of projected losses associated with the eleven loans in special servicing. These loans represent 3.7% of the current pool balance and have a weighted-average loan-to-value ratio (LTV) of 191%, based on the most recent appraised values. The increases in projected losses on the loans that have been in special servicing for a long period of time are attributed to a decrease in property values and an increase in the estimated expenses and fees based on the longer than expected time to resolution.

Since the last DBRS Surveillance Report , two small loans (Prospectus ID#199 Jamestown Flex Building and Prospectus ID#212 Regent Shoppes St. Cloud) have liquidated, contributing a total of $3,274,644 in realized loss to the trust. The losses associated with these loans were contained to the unrated Class P.

There are three primary loans of concern in the pool, the first of which, Grand Mart Chicago Portfolio (VII) (Prospectus ID#50, 0.5% of the current pool balance), has been in special servicing since March 2009. The loan is collateralized by three retail spaces, previously occupied by the Cubs Food grocer who has vacated the space. DBRS is anticipating significant losses on this loan.

Empire Towers (Prospectus ID#52, 0.5% of the current pool balance) is a 141,667 sf mixed-use property in Glen Burnie, Maryland, just south of Baltimore. The loan was transferred to special servicing in May 2009 due to payment default. The borrower subsequently filed for Chapter 11 bankruptcy protection in October 2010 and the property is currently under the management of a court appointed receiver. DBRS will continue to monitor this loan closely for the work out strategy.

Comfort Suites Chesapeake (Prospectus #69, 0.42%) is a 124-key limited-service hotel in Chesapeake, Virginia. The property was recently valued at $3.2 million, down from an issuance appraised value of $14.7 million and was previously on the watchlist for franchise agreement default. The loan was transferred to the special servicer in March 2010 due to monetary default and a receiver was appointed to the property in September 2010. The special servicer is tracking the loan for foreclosure.

The largest loans in the pool continue to exhibit stable performance. The top fifteen loans in the pool currently represent 36.4% of the pool balance and have a weighted-average DSCR of 1.60x and a weighted-average YE2009 occupancy rate of 95%.

There are currently 39 loans on the servicer’s watchlist, representing 12.2% of the pool balance.

As part of its review, DBRS analyzed the top fifteen loans, the 17 shadow-rated loans, the servicer’s watchlist and the eleven specially serviced loans. Together, these account for approximately 66.3% of the current pool balance.

DBRS has removed the shadow ratings for two loans: Creekside Inn (Prospectus ID#67, 0.43% of the current pool balance) and One Flint Hill (Prospectus ID#68, 0.39% of the current pool balance) due to performance decline since issuance.

DBRS continues to monitor this transaction on a monthly basis in the Monthly Global CMBS Surveillance report which can be found at www.dbrs.com.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is CMBS Rating Methodology and CMBS Surveillance, which can be found on our website under Methodologies.