Fitch Ratings downgrades the following classes of Morgan Stanley Capital I Inc.’s commercial mortgage pass-through certificates, series 1999-LIFE 1:
–$5.9 million class L to ‘B-/DR1’ from ‘B+’;
–$4.5 million class M to ‘C/DR5’ from ‘CCC/DR2’.
Additionally, Fitch affirms the following classes and assigns Rating Outlooks as follows:
–$328.5 million class A-2 at ‘AAA’; Outlook Stable;
–Interest-only class X at ‘AAA’; Outlook Stable;
–$20.8 million class B at ‘AAA’; Outlook Stable;
–$23.8 million class C at ‘AAA’; Outlook Stable;
–$8.9 million class D at ‘AAA’; Outlook Stable;
–$13.4 million class E at ‘AA’; Outlook Stable;
–$7.4 million class F at ‘A+’; Outlook Stable;
–$1.5 million class G at ‘A’; Outlook Stable;
–$10.4 million class H at ‘BBB+’; Outlook Stable;
–$7.4 million class J at ‘BB+’; Outlook Negative;
–$4.5 million class K at ‘BB’; Outlook Negative;
–$2.3 million class N at ‘C/DR6’.
Class A-1 has paid in full.
The downgrades and Negative Outlooks reflect Fitch’s expected losses on the two loans in special servicing as well as concerns about the refinancing of the 57% of the pool maturing in 2009. Currently there are two loans in special servicing. The largest specially serviced loan (1.2%), is secured by a 55,000 square-foot office property in Charlotte, NC.
The loan was transferred to the special servicer due to imminent default. The property has been vacant since April 2005 and the borrower has been making the debt service payments since then but has indicated that it is no longer willing to do so. The loan remains current. The special servicer is evaluating options and formulating workout strategy.
The second specially serviced loan (0.61%) is secured by a 120-unit apartment complex in Atlanta, GA. The property is currently under contract to be purchased and the loan assumed and modified to provide a two-year maturity extension. Currently losses are expected on both specially serviced loans.
Of the non-defeased loans in the pool, 57% mature in 2009: 3.77% mature in the first quarter, 29.17% in the second quarter, and 24.03% in the third quarter. Fitch has identified 10.11% of the pool as Fitch Loans of Concern due to low debt service coverage ratios or low occupancies. All but one (0.66%) of these loans mature in 2009. Future defaults and losses in these loans are possible.
Fitch has reviewed the shadow ratings of the two Edens & Avant loan portfolios (13.6%). At issuance, the portfolio was secured by 21 retail properties, anchored primarily by grocery and drug stores. Due to various property release and substitution activities, there are only 20 properties remaining in the portfolio, eight of which have defeased. The loans maintain their investment-grade shadow ratings despite declines in performance. The occupancies for Edens and Avant Portfolios I and II declined to 88% and 80.9% respectively. Both portfolios were 90% occupied at issuance.
The affirmations reflect stable performance and minimal paydown since Fitch’s last rating action. In total, 35 loans (35.41%) have defeased. As of the December 2008 distribution report, the pool’s aggregate certificate balance has been reduced by 26.8% to $429.2 million from $594 million at issuance.
L.D.