DBRS Downgrades Twelve, Confirms Eight Classes of Morgan Stanley Capital I Trust, Series 2007-TOP25

DBRS has today confirmed the following classes of Morgan Stanley Capital I Trust, Series 2007-TOP25:

-- Classes A-2, A-3, A-1A, A-AB and X at AAA (sf)
-- Class B at B (sf)
-- Classes D and E at CCC (sf)

DBRS has also downgraded the following classes:

-- Class A-M to AA (sf) from AAA (sf)
-- Class A-J to BBB (low) (sf) from BBB (sf)
-- Class C to B (low) (sf) from B (sf)
-- Class F to D (sf) from CCC (sf)
-- Classes G, H, J, K, L, M, N and O to D (sf) from C (sf)

The trend for Classes A-2 through C, including notional Class X, is Stable.

The downgrades are a result of losses realized by Classes F through O following the liquidation of five loans from the trust. The decline in credit enhancement resulting from the realized losses combined with the performance challenges for the remaining loans in special servicing resulted in the additional downgrades to Classes A-M, A-J and C.

Village Square (Prospectus ID#4) was liquidated from the trust as of the December 2011 remittance with a $51.2 million loss. The loan originally transferred to special servicing in February 2009 for payment default. Collateral for the loan was a 238,000 square foot (sf) shopping center anchored by an 18-screen Regal Cinemas movie theater located in northwest Las Vegas. An appraisal from July 2010 valued the property at $29 million. This figure declined further when a June 2011 appraisal indicated a property value of $18.1 million. The asset was sold on November 16, 2011, for a purchase price of $17.5 million, according to servicer reports.

In addition, Country Inn & Suites Dalton (Prospectus ID#77) was liquidated from the trust this month for a realized trust loss of $2.9 million. Combined, the losses realized in the December 2011 remittance eliminated Classes G through P, and reduced the balance of Class F by approximately 3.7%. Recoveries from the liquidations have resulted in the pay-down of Class A-1, and interest shortfalls were repaid to all DBRS-rated classes.

Since the last surveillance review in December 2010, three loans have been able to pay out in full of the pool at maturity. There are currently 194 of the original 204 loans remaining in the pool. The pool is concentrated in the top fifteen loans, which represent nearly 45% of the current pool balance, and the top ten loans, which represent nearly 38% of the current pool balance. The weighted-average debt service coverage ratio (DSCR) for the top fifteen loans is 1.23 times (x).

In addition to these rating actions, DBRS has today confirmed its investment-grade shadow ratings on six loans in the pool.

As part of its review, DBRS analyzed the top fifteen loans, the six shadow-rated loans, the servicer’s watchlist and the ten specially serviced loans. Together these account for approximately 79.4% of the current pool balance.

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

The applicable methodologies are CMBS Rating Methodology and CMBS North American Surveillance, which can be found on our website under Methodologies.