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

DBRS Limited (DBRS) confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2007-TOP25 issued by Morgan Stanley Capital I Trust, Series 2007-TOP25 as follows:

-- Class A-J at BBB (low) (sf)
-- Class B at B (sf)
-- Class C at C (sf)

All trends are Stable with the exception of Class C, which has a rating that does not carry a trend.

The rating confirmations reflect the overall stable performance of the transaction. As of the February 2019 remittance, ten of the original 204 loans remain in the trust, with an aggregate principal balance of $119.6 million. Since issuance, the pool has experienced a collateral reduction of 92.3% as a result of scheduled loan amortization and successful loan repayment, in addition to principal recovered from liquidated loans and realized losses from liquidated loans. To date, 25 loans have been liquidated from the trust, resulting in realized losses of $99.3 million. Two loans were recently liquidated from the trust with no losses incurred and contributed to a collateral reduction of 0.6% since last review.

The pool is concentrated by loan size, with the largest three loans representing 82.0% of the pool. Two of the three largest loans, Shoppes at Park Place (Prospectus ID#3; 58.7% of the pool) and Romeoville Towne Center (Prospectus ID#16; 15.0% of the pool), are currently in special servicing.

Shoppes at Park Place is secured by a 325,270-square-foot (sf) retail power centre located in Pinellas Park, Florida. The loan transferred to special servicing in January 2017 due to maturity default and has struggled to obtain refinancing since, which may be a result of the sponsor’s poor credit history. Although no 2017 or 2018 financials have been received, the property benefits from strong historical occupancy trends. As of December 2018, occupancy remained above 95.0%. In addition, the property had an appraised value of $103.0 million as of February 2018, well above the issuance value of $90.0 million and the current outstanding loan balance of $70.1 million. DBRS expects the resolution for this loan to be relatively positive, given the healthy occupancy rate, the property’s strong location and the most recent valuation, which suggests that a successful refinance is possible. The servicer has ordered an updated appraisal and indicated that a foreclosure trial is expected to occur sometime during Q4 2019. DBRS will continue to monitor the loan closely for developments.

The second-largest loan, Romeoville Towne Center, is secured by a 108,242 sf grocery-anchored shopping centre located in the Chicago suburb of Romeoville, Illinois. This loan was also transferred to special servicing in January 2017 due to maturity default, and according to the servicer, a foreclosure sale occurred in January 2019. The property’s largest space, formerly occupied by Dominick’s Pizza (60.5% of the net rentable area), has been dark for several years, following the closure of all the chain’s stores located throughout the Chicago area. As of January 2019, the property had a physical vacancy rate of 32.0%. Per the October 2018 appraisal, the property was valued at $9.1 million, a significant decline from $27.2 million at issuance, reflecting a 66.5% decline in value. DBRS analyzed the loan with a loss severity in excess of 70.0% as part of this review.

All ratings are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed or discontinued by DBRS.

DBRS provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Prospectus ID#3 – Shoppes at Park Place (58.7% of the pool balance)
-- Prospectus ID#16 – Romeoville Towne Center (15.0% of the pool balance)
-- Prospectus ID#62 – Office Depot – Paramus (4.0% of the pool balance)
-- Prospectus ID#80 – Pleasant Grove Marketplace (2.1% of the pool balance)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrs.com. The platform includes issuer and servicer data for most outstanding commercial mortgage-backed security transactions (including non-DBRS rated), as well as loan-level and transaction-level commentary for most DBRS-rated and -monitored transactions.

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

The principal methodology is North American CMBS Surveillance Methodology, which can be found on www.dbrs.com under Methodologies & Criteria. For a list of the structured-finance-related methodologies that may be used during the rating process, please see the DBRS Global Structured Finance Related Methodologies document, which can be found on www.dbrs.com in the Commentary tab under Regulatory Affairs. Please note that not every related methodology listed under a principal structured finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

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 under Related Documents or by contacting us at info@dbrs.com.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The DBRS long-term rating scale definition indicates that ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

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

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