Fitch Ratings has upgraded one class and affirmed nine classes of Morgan Stanley Dean Witter Capital I Trust (MSDWCI) commercial mortgage pass-through certificates series 2001-Top3. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The upgrade to class C is due to high credit enhancement and the anticipated full payoff of the class; both as a result of defeasance and the likely refinance of the largest loan in the pool, which is scheduled to mature in January 2016. Fitch modeled losses of 2.8% of the remaining pool; expected losses on the original pool balance total 5.7%, including $57.9 million (5.6% of the original pool balance) in realized losses to date. Fitch has designated one Fitch Loan of Concern (1.8%); no loans are specially serviced.
As of the January 2015 distribution date, the pool's aggregate principal balance has been reduced by 95.8% to $42.8 million from $1.03 billion at issuance. Per the servicer reporting, three loans (5.1% of the pool) are defeased. Interest shortfalls are currently affecting classes G through N. Of the original 158 loans, 22 remain with 0.8% maturing in 2015, 40.7% in 2016 and 57.1% in 2021. Loans representing 68.8% of the pool are balloon loans, while the remaining 31.2% are fully amortizing.
The largest loan (23.8% of the pool) is secured by a 111,400 square foot (sf) office property located in Marina del Ray, CA. The building is 100% leased to Omnicom Group, a large advertising and media company. While the lease expires in June 2015, the servicer reports that the tenant has notified them that they will renew. Terms of the renewal are not yet available. The loan continues to perform well with a debt service coverage ratio (DSCR) of 2.17x reported as of September 2014. The loan matures in January 2016.
The second largest loan (13.5%) is secured by a 56,963 sf single-tenant retail property located in Belle Harbor, Queens, NY. The building is 100% occupied by Waldbaum, a subsidiary of A & P Company, which emerged as a private company in 2012 after filing for bankruptcy. The tenant is still occupying the property and is paying a negotiated rent. The DSCR was reported to be 1.45x at year-end (YE) 2013. The maturity date is in June 2021.
The Fitch Loan of Concern is secured by a 19,813 sf office building (1.8%) located in Tustin, CA, which is roughly eight miles from Anaheim. The property has continued to struggle with decreasing occupancy which was reported to be 54% as of September 2014 compared with 58% at YE 2013 and 63% at YE 2012. The occupancy issues have also led to a decrease in the DSCR, which was 0.74x as of September 2014 compared to 0.91x at YE 2012. The loan remains current and matures in March 2016.
RATING SENSITIVITIES
Rating Outlooks on classes C and D remain Stable and the Rating Outlook on class E has been revised to Stable from Negative due to anticipated increases in credit enhancement and limited expected losses from the remaining loans. Future upgrades will be limited due to the increasing concentrations within the pool.
Fitch upgrades the following class as indicated:
--$5.4 million class C to 'AAAsf' from 'AAsf', Outlook Stable.
Fitch affirms the following classes and revises the Rating Outlook and RE as indicated:
--$18 million class E at 'BBsf', Outlook to Stable from Negative;
--$6.5 million class F at 'Dsf', RE 95%.
Fitch affirms the following classes as indicated:
--$12.9 million class D at 'Asf', Outlook Stable;
--$0 class G at 'Dsf', RE 0%;
--$0 class H at 'Dsf', RE 0%;
--$0 class J at 'Dsf', RE 0%;
--$0 class K at 'Dsf', RE 0%;
--$0 class L at 'Dsf', RE 0%;
--$0 class M at 'Dsf', RE 0%.
The class A-1, A-2, A-3, A-4, B and X-2 certificates have paid in full. Fitch does not rate the class N certificates. Fitch previously withdrew the rating on the interest-only class X-1 certificates.
Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 10, 2014 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at 'www.fitchratings.com' under the following headers:
Structured Finance >> CMBS >> Criteria Reports
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (Aug. 4, 2014);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 10, 2014).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=977455
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