DBRS Downgrades One Class of Morgan Stanley Capital I Trust 2005-HQ6

DBRS Limited (DBRS) has today downgraded the rating of the following class of Commercial Mortgage Pass-Through Certificates, Series 2005-HQ6 (the Certificates) issued by Morgan Stanley Capital I Trust 2005-HQ6:

-- Class J to D (sf) from C (sf)

In conjunction with this rating action, DBRS has removed the Interest in Arrears designation for Class J.

The rating downgrade is the result of the most recent realized losses to the trust, which were caused by the liquidation of four of the remaining eight loans with the May 2016 and June 2016 remittances. The three loans that liquidated with the May 2016 remittance include the Shops at Lakeline Village (Prospectus ID#112), the Town Centre Office and Executive Suites (Prospectus ID#89) and the Tinley Crossings Corporate Center (Prospectus ID#92), which were liquidated from the pool with individual trust losses of approximately $0.58 million, $4.17 million and $2.18 million, respectively, or a cumulative loss to the trust of $6.93 million. The fourth and largest loan liquidated, County Line Commerce Center (Prospectus ID#23), was disposed with the June 2016 remittance, incurring a realized loss to the trust of $18.8 million and a loss severity of 88.8% on the outstanding trust balance. These trust losses wiped the remaining balance on Class K and reduced the principal balance on Class J by 26.8%. As of the June 2016 remittance, one of the remaining four loans is in special servicing, with an outstanding principal balance of $8.88 million.

The County Line Commerce Center loan was secured by a multi-tenant office/industrial complex located in Warminster, Pennsylvania, approximately 50 miles northeast of Philadelphia. The loan transferred to special servicing in March 2009 because of imminent default and had been real-estate owned since September 2010. The appraisal dated August 2015 valued the property at $9.6 million, down from the $37.0 million at issuance. The value decline was attributed to a variety of factors that included environmental issues and soft market conditions. The trust loss was in line with DBRS expectations for the four loans that liquidated in the last few months, with a weighted-average loss severity of 73.5% as of the June 2016 remittance.

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

The applicable methodologies are North American CMBS Rating Methodology (March 2016) and CMBS North American Surveillance (December 2015), which can be found on our website under Methodologies.

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