DBRS Downgrades Three Classes and Discontinues One Class of Morgan Stanley Capital I Trust, Series 2007-IQ16

DBRS Limited (DBRS) has today downgraded the rating of three classes of Morgan Stanley Capital I Trust, Series 2007-IQ16 (the Trust) as follows:

-- Class E to D (sf) from C (sf)
-- Class F to D (sf) from C (sf)
-- Class G to D (sf) from C (sf)

In addition, DBRS has discontinued the rating of Class X-2, which has been paid in full.

DBRS has also removed the Interest in Arrears designation from Classes C, D, E, F and G of the Trust as previous interest shortfalls affecting these classes have been recouped.

The downgrades are a result of the most recent realized losses to the Trust, which occurred in November 2015 after eight loans were liquidated from the pool. The realized losses from the liquidations amounted to approximately $62.5 million. There are currently 174 loans remaining in the Trust out of the original 234 loans at issuance. According to the most recent financials, the pool is reporting an annualized weighted-average debt service coverage ratio of 1.31 times and a weighted-average debt yield of 9.4%. There are currently six loans in special servicing and 48 loans on the servicer’s watchlist, representing 2.6% and 21.9% of the pool balance, respectively.

Hilton Daytona Beach was secured by a 744-room full-service hotel in Daytona Beach, Florida, consisting of two towers. The original South Tower was built in 1988 with 16 floors and 440 rooms and the North Tower was subsequently built in 2002 with 16 floors and 204 rooms. The loan originally transferred to special servicing in October 2011 due to monetary default and foreclosed in August 2013. At issuance, the property was valued at $150.3 million, compared with the most recent appraisal value of $48.0 million as of November 2014. This appraisal value included a capital deduction of $19.0 million in property improvement plans. According to the servicer, the asset was sold for approximately $92.3 million, resulting in a realized loss to the Trust of $11.2 million and a loss severity of 11.8%.

Hilton Antlers Colorado Springs was secured by a 292-room full-service hotel located in Colorado Springs, Colorado, originally built in 1967 and renovated in 2005. This loan transferred to special servicing in January 2013 due to imminent default and became real estate owned in January 2013. The most recent appraisal value for the property was $20.6 million as of December 2014 compared with the issuance appraised value of $55.2 million. According to the servicer, the property was sold for approximately $23.2 million, resulting in a realized loss to the Trust of $16.5 million and a loss severity of 47.7%.

For additional details on the DBRS viewpoint for this transaction and for details on the largest loans in the pool, the loans in special servicing and the loans on the servicer’s watchlist, please see the November 2015 Monthly CMBS Surveillance Report for this transaction, which will be published shortly.

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

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

The applicable methodology is North American CMBS Rating Methodology (March 2015) and CMBS North American Surveillance (January 2015) which can be found on our website under Methodologies.

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

This is an unsolicited credit rating. This credit rating was not initiated at the request of the issuer and did not include participation by the issuer or any related third party.

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