DBRS Upgrades Rating of Morgan Stanley Capital I Trust 2005-HQ6

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

-- Class H to A (high) (sf) from BB (sf)

The trend remains Stable.

The rating upgrade reflects the increased credit support to the bonds as a result of loan amortization, proceeds recovered from loan liquidations and successful loan repayment. Since issuance, the transaction has experienced collateral reduction of 98.9%, with three of the original 177 loans outstanding as of the March 2017 remittance report. Over the past year, five loans have liquidated from the trust with a combined realized loss of $30.1 million, which completely eroded the remaining balance of Class K and wiped out 40.9% of Class J. To date, 42 loans have liquidated from the trust, representing an aggregate realized loss to the trust of $161.7 million.

As of the March 2017 remittance, one loan (41.3% of the pool) reported a partial-year 2016 (Q3 2016) cash flow, while the remaining two loans (58.7% of the pool) reported YE2016 cash flows. Based on the 2016 cash flows, the pool had a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 1.52 times (x) and 12.6%, respectively. Two loans (85.5% of the pool) are scheduled to mature in April 2018, while the remaining loan (15.5% of the pool) is scheduled to mature in March 2020. Based on the most recent financials, these loans had a WA DBRS Refinance DSCR and Exit Debt Yield of 1.30x and 13.1%, respectively.

DBRS has provided updated loan-level commentary and analysis for the remaining loans in pool, which can be found in the DBRS CMBS IReports platform. To view these and future loan-level updates provided as part of DBRS’s ongoing surveillance for this transaction, please log in to DBRS CMBS IReports at www.ireports.dbrs.com.

The ratings assigned to Class H materially deviates from the higher rating implied by the Large Pool Multi-Borrower Parameters. DBRS considers this to be a methodology deviation (i.e., when there is a rating differential of three or more notches between the assigned rating and the rating implied by the Large Pool Multi-Borrower Parameters); in this case, the uncertainty of loan-level event risk.

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.

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

The applicable methodologies are the North American CMBS Rating Methodology (January 2017) and CMBS North American Surveillance (December 2016), which can be found on dbrs.com under Methodologies.

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