DBRS Downgrades One Class and Confirms 10 Classes of Morgan Stanley Capital I Trust, Series 2007-TOP25

DBRS has today downgraded the rating of one class of Morgan Stanley Capital I Trust, Series 2007-TOP25:

-- Class E to C (sf) from CCC (sf)

DBRS has also confirmed the ratings of ten additional classes, as follows:

-- Class A-2, A-3, A-AB, A-1A and X at AAA (sf)
-- Class A-M at AA (sf)
-- Class A-J at BBB (low) (sf)
-- Class B at B (sf)
-- Class C at B (low) (sf)
-- Class D at CCC (sf)

Classes A-2 through C, including Class X, carry Stable trends.

The downgrade to Class E follows additional projected losses resulting from the transfer of three loans to special servicing since the last surveillance review of this transaction. As of the November 2012 remittance, the three loans transferred to special servicing in 2012 have an aggregate outstanding principal balance of $12.1 million. The outstanding principal balance for all loans currently in special servicing totals approximately $24.7 million.

The largest loan in special servicing is the Hampton Inn Rochester (Prospectus ID#44, 0.54% of the current pool balance), which is secured by a 118-room, limited-service hotel just northwest of the Rochester, New York CBD. This loan transferred to the special servicer in September 2011 for imminent default. It has been noted that there is a significant amount of competition in the area. For the trailing twelve months ending in November 2011, the occupancy and ADR were 47.6% and $111.41, respectively. The DSCR for the trailing six months ending in September 2012 was reported to be 1.40x; however, this figure does not include figures from the 2011-2012 winter season. A January 2012 appraisal valued the property at $5.0 million, down from $11.3 million at issuance. According to a 2011 servicer site inspection, capital improvements scheduled through 2012 were projected to cost approximately $8,900 per room. DBRS will follow up with the servicer to confirm who has been funding these improvements.

In the last twelve months, three loans have liquidated from the pool, incurring a combined realized trust loss of $58.3 million. Nine loans, representing 6.1% of the current pool balance, are schedule to mature in 2013. The average DSCR and debt yield for these loans is 1.43x and 12.7%, respectively.

In addition to the above-noted ratings actions, DBRS has today confirmed the investment-grade shadow ratings for six loans, representing 6.4% of the current pool balance.

As part of its review, DBRS analyzed the top 15 loans, loans in special servicing, large loans on the servicer’s watchlist and six shadow-rated loans, which together comprise approximately 57.4% of the current pool balance.

DBRS continues to monitor this transaction in its Monthly CMBS Surveillance Report, with additional information on the DBRS viewpoint for this transaction, including details on the largest loans in the pool, the loans in special servicing and the loans on the servicer’s watchlist. The December 2012 Monthly Surveillance Report for this transaction will be published shortly. If you are interested in receiving this report, contact us at info@dbrs.com.

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

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodologies are CMBS Rating Methodology (January 2012) and CMBS North American Surveillance Methodology (November 2012), which can be found on our website under Methodologies.