Fitch Ratings has downgraded seven speculative classes of Morgan Stanley Capital I Trust (MSCI), series 2006-IQ12 commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this release.
The downgrades reflect an increase in Fitch expected losses. Fitch modeled losses of 12.3% of the original pool balance (including losses incurred to date). There are currently 18 specially serviced loans (4.8%). Fitch affirmed the A-M class at 'AAA'. The Negative Outlooks reflect the high Fitch LTV's and upcoming lease rollover on several of the larger loans in the pool.
As of the August 2012 distribution date, the pool's aggregate principal balance has been paid down to $2.04 billion from $2.8 billion at issuance. No loans have fully defeased since issuance. Interest shortfalls are affecting classes H through S.
The largest contributor to modeled losses is a loan (2.2%), backed by a 217,056-square foot office property located in Aventura, FL, northeast of Miami International Airport. The loan transferred to special servicing in April 2009 due to imminent default as insufficient funds were available to support leasing efforts, complicated by a Tenants-In-Common (TIC) ownership structure. A loan modification that extends the interest-only period of the loan to January 2013 and the funding of a leasing costs reserve was approved and the loan has returned to the master servicer as a corrected mortgage loan. Fitch is concerned with the large amount of rollover (33% of NRA) taking place prior to year end 2014.
The second largest contributor to losses (1.2%) is a 305,122-square foot office property located in Carmel, IN. The loan was transferred to special servicing in January 2012 due to imminent monetary default. The special servicer is pursuing foreclosure.
Fitch downgrades the following classes as indicated:
--$242.3
million class A-J to 'CCCsf' from 'Bsf'; RE 85%;
--$17.1 million
class B to 'CCsf' from 'CCCsf'; RE 0%;
--$44.4 million class C to
'Csf' from 'CCsf'; RE 0%;
--$13.1 million class E to 'Dsf' from
'Csf'; RE 0%;
--Class F to 'Dsf' from 'Csf'; RE 0%;
--Class G
to 'Dsf' from 'Csf'; RE 0%;
--Class H to 'Dsf' from 'Csf'; RE 0%.
Fitch also affirms the following classes as indicated:
--$448.2
million class A-1A at 'AAAsf'; Outlook Stable;
--$6.9 million class
A-3 at 'AAAsf'; Outlook Stable;
--$74.8 million class A-AB at
'AAAsf'; Outlook Stable;
--$897.6 million class A-4 at 'AAAsf';
Outlook Stable;
--$173 million class A-M at 'AAAsf'; Outlook to
Negative from Stable;
--$100 million class A-MFX at 'AAAsf';
Outlook to Negative from Stable;
--$27.3 million class D at 'Csf';
RE 0%;
--Class J at 'Dsf'; RE 0%;
--Class K at 'Dsf'; RE 0%;
--Class
L at 'Dsf'; RE 0%;
--Class M at 'Dsf'; RE 0%;
--Class N at
'Dsf'; RE 0%.
Classes A-1, A-2, and A-NM have paid in full. Fitch does not rate
classes O, P, Q, and S.
Fitch previously withdrew the ratings on
the interest-only classes X-1, X-2, X-W, and A-MFL.
Additional information on Fitch's criteria for analyzing fixed rate U.S.
CMBS is available in the Dec. 21, 2011 report, 'Surveillance Methodology
for U.S. Fixed-Rate CMBS Transactions', which is available at www.fitchratings.com
under the following headers:
Structured Finance >> CMBS >> Criteria
Reports
Additional information is available at www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Surveillance
Methodology for U.S. Fixed-Rate CMBS Transactions' (Dec. 21, 2011);
--'Global
Structured Finance Rating Criteria' (June 6, 2012).
Applicable Criteria and Related Research:
Surveillance Methodology
for U.S. Fixed-Rate CMBS Transactions
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=662869
Global
Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923
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Fitch Ratings
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Natalie Ulloa, +1-212-908-9166
Associate
Director
Fitch, Inc.
One State Street Plaza
New York, NY
10004
or
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Mary MacNeill,
+1-212-908-0785
Managing Director
or
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Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com