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

DBRS, Inc. (DBRS Morningstar) confirmed its ratings on the Commercial Mortgage Pass-Through Certificates, Series 2007-TOP25 (the Certificates) issued by Morgan Stanley Capital I Trust, Series 2007-TOP25 (the Trust) 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 over the last year. As of the February 2020 remittance, eight of the original 204 loans remain in the Trust with an aggregate principal balance of $108.1 million. Since issuance, there has been a collateral reduction of 93.0% as a result of scheduled loan amortization, successful loan repayments, principal recovered from liquidated loans, and realized losses from liquidated loans. To date, 26 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, contributing to a collateral reduction of 9.6% since DBRS Morningstar’s last full surveillance review of the transaction in March 2019.

The remaining pool is concentrated by loan size with the two largest loans, representing 81.2% of the pool, both in special servicing. DBRS Morningstar’s cumulative loss projections, based on the most recent appraised values for the properties securing loans in special servicing, suggest that losses will be contained to the Class C certificate at resolution; however, DBRS Morningstar notes the high concentration of exposure to large loan defaults for the remaining certificates and will monitor value updates closely for the remainder of the loans’ tenure in special servicing.

Shoppes at Park Place (Prospectus ID#3; 64.9% of the pool) is secured by a 325,270-square-foot (sf) retail power center in Pinellas Park, Florida. The loan transferred to special servicing in January 2017 for maturity default, which appears to be largely driven by sponsor issues. The October 31, 2019, rent roll showed that the property was 94.5% occupied, which has been stable since issuance. Although occupancy has remained stable, the property was most recently appraised at $81.5 million in January 2019, a significant decline from the February 2018 appraised value of $103.0 million. Per special servicer commentary, a foreclosure trial was conducted in December 2019 and a receiver was appointed in January 2020 with a foreclosure sale scheduled for March 18, 2020. Although the value decline from 2019 to 2020 is noteworthy, DBRS Morningstar’s loss projections remain relatively moderate with a loss severity at liquidation expected to be below 20%.

The second-largest loan, Romeoville Towne Center (Prospectus ID#16; 16.3% of the pool), is secured by a 108,242 sf, formerly Dominick’s grocery-anchored shopping center in the Chicago suburb of Romeoville, Illinois. This loan transferred to special servicing in January 2017 for maturity default with title obtained by the Trust in February 2019. Per the October 2018 appraisal, the property was valued at $9.1 million, a significant decline from $27.2 million at issuance. DBRS Morningstar analyzed the loan with a loss severity exceeding 80.0% 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 Morningstar.

DBRS Morningstar 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 (64.9% of the pool)
-- Prospectus ID#16 – Romeoville Towne Center (16.3% of the pool)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com. The platform includes issuer and servicer data for most outstanding CMBS transactions (including non-DBRS Morningstar rated), as well as loan-level and transaction-level commentary for most DBRS Morningstar-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 Morningstar 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 rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar 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 Morningstar 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 [email protected].

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