DBRS Downgrades Class P of Morgan Stanley Capital I Trust 2005-HQ6 to D (sf)

DBRS has today downgraded the Commercial Mortgage Pass-Through Certificates, Series 2005-HQ6, Class P (the Class P) rating of Morgan Stanley Capital I Trust 2005-HQ6 (the Trust) to D (sf) from C (sf). As part of this rating action, DBRS has also removed the Interest in Arrears designation from the Class P.

The downgrade is the consequence of realized losses to the Trust as a result of the liquidation of two loans out of the Trust.

Prospectus ID #104 (Rocklin Portfolio) was liquidated at a loss of $2.81 million as of the February 2012 remittance report. That loan was secured by one free-standing industrial property comprising 52,000 square feet (sf) and a retail property comprising 18,000 sf in Rocklin, California. The loan transferred to the special servicer in July 2010 after the borrower requested a modification. The properties were fully occupied as of the most recent update provided by the special servicer. The most recent appraisal, dated July 2011, valued the properties at $3.8 million. The property has been real estate owned (REO) since Q3 2011 and recently sold for approximately $2.75 million, with $2.03 million available in proceeds for principal repayment at liquidation. As of the February 2012 remittance report, the realized loss severity was 58.1%.

Prospectus ID #140 (Oaks Plaza) was liquidated at a loss of $1.5 million as of the February 2012 remittance report. The loan was secured by a suburban office portfolio comprising 42,000 sf, located in Temple Terrace, Florida. At the time of the loan’s transfer to the special servicer in 2010, the property was 62% occupied and found to be in Fair condition overall by the special servicer. A July 2011 appraisal valued the property at $2 million. The property has been REO since Q1 2011 and recently sold at a price of approximately $1.95 million, with $1.5 million in proceeds available for principal repayment at liquidation. As of the February 2012 remittance report, the realized loss severity was 49.4%.

DBRS will conduct a full surveillance review of this transaction in the next 30 days to address concerns with these and other recent losses to the trust and the remaining loans in special servicing.

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

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