DBRS Morningstar Confirms Three Classes of Morgan Stanley Capital I Trust, Series 2007-TOP27
CMBSDBRS Limited (DBRS Morningstar) confirmed the remaining three classes of Commercial Mortgage Pass-Through Certificates, Series 2007-TOP27 (the Certificates) issued by Morgan Stanley Capital I Trust, Series 2007-TOP27 (the Trust), as follows:
-- Class A-J at A (low) (sf)
-- Class B at BBB (sf)
-- Class C at B (low) (sf)
The trend on Class A-J remains Positive and the trends on Classes B and C remain Stable.
The ratings confirmation reflects the overall stable performance of the deal as the largest loan in the pool, 360 Park Avenue South (Prospectus ID#1, 98.8% of the pool), continues to report strong net cash flow figures. This loan is secured by a Class B office property located in Manhattan that is fully leased to an investment grade tenant and lease guarantor, RELX Group (formerly known as Reed Elsevier). RELX Group vacated their space in Q3 2016 and the majority of the building has been subleased since that time. The RELX Group lease is scheduled to expire in December 2021, three months before the March 2022 maturity date. CBRE Group, Inc. was engaged to market the space and the borrower has expressed its intention to backfill the majority of the space to a large tenant; however, DBRS Morningstar believes the property is reasonably well positioned to transfer to a multitenant lease, given the healthy submarket metrics. While the Trust’s exposure at maturity of $422 per square foot is slightly high for a Class B office property and there is the possibility that the in-place occupancy rate could be low at maturity, an online brochure noted the property is expected to be revamped by 2022 with modernized common areas and open floor plans for tenants, suggesting the sponsor’s commitment to the property through its increased efforts to improve property quality and achieve a stabilized occupancy beyond maturity. DBRS Morningstar recognizes the risks associated with a possibly vacant property by maturity and potential challenges faced to release space amid the Coronavirus Disease (COVID-19) pandemic; as such, DBRS Morningstar has analyzed the loan conservatively for the purposes of this review.
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.
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#1 – 360 Park Avenue South (98.8% of the pool)
For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com The platform includes loan-level 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 the North American CMBS Surveillance Methodology (March 6, 2020), which can be found on dbrsmorningstar.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 dbrsmorningstar.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.
For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.
For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308
For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.
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@dbrsmorningstar.com.
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.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.
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