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

DBRS, Inc. (DBRS) has today confirmed the following classes of Morgan Stanley Capital I Trust, Series 2007-TOP25 as follows:

--Class A-1A at AAA (sf)
--Class A-3 at AAA (sf)
--Class 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)

The trend on Class C remains Negative. Classes A-1A through B have been confirmed with Stable trends.

Since the last surveillance review in December 2013, seven loans have been repaid from the trust and three loans have been fully defeased. DBRS placed Class C on a Negative trend in December 2013 to reflect the recent transfer of one loan to special servicing and the potential transfer of another loan. Both of these loans, along with a third loan previously in special servicing, have since been liquidated from the trust; however, there have been four new transfers to special servicing in the last 12 months, and DBRS has maintained the Negative trend on Class C.

As of the December 2014 remittance, the weighted-average (WA) debt service coverage ratio (DSCR) for the pool is 1.55 times (x) and the WA debt yield is 11.0%. Many of the Top 15 loans are secured by quality assets that have continued to perform well over time. The WA net cash flow (NCF) change from DBRS underwriting (UW) for non-watchlist loans in the Top 15 is 13.3%. Although several loans report NCF declines from the DBRS UW figures, the WA DSCR for the Top 15 loans is 1.53x and the WA DSCR for Top 15 loans on the watchlist is 1.35x.

The largest loan in special servicing is Romeoville Towne Center (Prospectus ID#16; 1.5% of the current pool balance). This loan is secured by an anchored retail property in the Chicago suburb of Romeoville, Illinois. The asset was previously anchored by a Dominick’s grocery store, which occupied 57.5% of the net rentable area on a lease expiring in 2019. Safeway Inc. (Safeway), Dominick’s parent company, announced its plans to pull the chain from the Chicago market in December 2013. The space is now dark, as all Dominick’s stores in the Chicago area have closed. Safeway continues to pay rent and the borrower may not terminate the lease unless the tenant defaults. While the special servicer has not been made aware of plans for the space, the space is being marketed on CoStar as available for rent. The property is well located along a major commercial artery. While there are competing grocery stores with locations along this corridor, there do not seem to be any situated in the immediate vicinity. The borrower remains current on debt service payments, and the loan is scheduled to mature in January 2017.

Six loans are currently rated investment grade by DBRS, and these shadow-ratings were also confirmed as part of this review. These loans are the London NYC Hotel Land Interest (Prospectus ID#10), 24 Fifth Avenue CoOp (Prospectus ID#19), Huron Estates (Prospectus ID#18), Gracie Gardens CoOp (Prospectus ID#23), York Towers CoOp (Prospectus ID#38) and Novi Meadows (Prospectus ID #43). There is a total of eight loans in special servicing, representing 3.2% of the current pool balance. In addition, 44 loans are on the servicer’s watchlist, representing 21.8% of the current pool balance. As part of this surveillance review, DBRS performed an in-depth analysis of all loans in special servicing, the Top 15 loans, the shadow-rated loans and large watchlist loans, which represented 54.1% 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 2014 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.

DBRS will publish a full report shortly that will provide additional analytical detail on this rating action. If you are interested in receiving this report, contact us at info@dbrs.com.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.