Fitch Affirms MSC 2011-C1

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed nine classes of Morgan Stanley Capital I Trust (MSC) commercial mortgage pass-through certificates, series 2011-C1. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations reflect continued paydown and overall stable performance since Fitch's last rating action. As of the October distribution date, the pool's aggregate principal balance has been reduced by 44.9% to $852.7 million from $1.5 billion at issuance. Two loans (3.9% of the current balance) are fully defeased. Interest shortfalls in the amount $288 are currently affecting class M.

There was a variance from criteria related to class C for which the model output suggested that an upgrade was possible. Fitch determined that an upgrade is not warranted at this time due to the pool's concentration, high percentage of retail loans, and the long-dated maturities of the remaining loans.

Stable Performance of the Pool: As of the October distribution date, all loans in the pool are current and there are no loans with the special servicer.

Concentrated Pool: Only 26 loans remain, with the top 15 representing 90% of the pool's current balance.

High Percentage of Retail Loans: There are 11 loans in the pool (44.5%) that are secured by retail properties.

Long-Dated Maturities: The remaining loans in the pool all have long-dated maturities, with the earliest occurring in 2019. Loan maturities are concentrated in years 2020 (47.3%) and 2021 (46.7%).

Occupancy Fluctuations for Top 15 Loans

Performance of the Grace Place & Goodrich Buildings loan (3.7%) is expected to improve with the re-tenanting of a large portion of the rentable space. The loan is secured by a 30,640 sf office building and a 492,699 sf industrial property located in Commerce, CA. Occupancy dropped sharply at the properties when two large tenants vacated leaving the combined properties with occupancy of 20%. With the decrease in occupancy, the servicer reported net operating income (NOI) debt service coverage ratio (DSCR) dropped to 0.29x for the period July 2015 to June 2016. A new tenant executed a lease in July 2016 for the vacant space at the industrial property, bringing the combined occupancy of the properties back up to 88% as of the August 2016 rent roll. While the office building still remains fully vacant, Fitch expects loan performance to improve as revenue reverts back to its 2014 level.

The Capitol Tower loan (3.2%) is secured by a 20-story tower containing eight stories of office space, an 11-level parking garage, and a single level of retail space located in downtown Austin, TX. The loan was structured with a cash sweep that was triggered when the largest tenant, Young & Rubicam Inc. (41% of net rentable area), failed to provide the borrower notice of their intention to renew their lease (expiring in January 2017). Per servicer reporting, Young & Rubicam Inc. has since renewed their lease, which now expires in January 2022. Fitch expects this loan to be removed from the master servicer's watchlist as a result of the recent renewal. Per servicer reporting, the property was fully occupied with an NOI DSCR of 2.57x as of year-end 2015.

RATING SENSITIVITIES

The Rating Outlooks on all classes remain Stable. Upgrades are possible as the transaction continues to season and benefit from amortization. Downgrades are also possible if a negative economic or asset-level event changes the transaction's overall portfolio-level metrics.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10

No third-party due diligence was provided or reviewed in relation to this rating action.

Fitch has affirmed the following ratings:

--$94.5 million class A-3 at 'AAAsf'; Outlook Stable;

--$404.1 million class A-4 at 'AAAsf'; Outlook Stable;

--$60 million class B at 'AAAsf'; Outlook Stable;

--$498.5 million* class X-A at 'AAAsf'; Outlook Stable;

--$89 million class C at 'AAsf'; Outlook Stable;

--$85.2 million class D at 'Asf'; Outlook Stable.;

--$19.4 million class E at 'BBBsf'; Outlook Stable;

--$13.5 million class F at 'BB+sf'; Outlook Stable;

--$15.5 million class G at 'BBsf'; Outlook Stable.

*Notional amount and interest only.

The class A-1 and A-2 certificates have all paid in full. Fitch does not rate the class H, J, I, K, L, M, and X-B certificates.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 01 Sep 2016)

https://www.fitchratings.com/site/re/886006

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 16 Jun 2016)

https://www.fitchratings.com/site/re/882401

Global Structured Finance Rating Criteria (pub. 27 Jun 2016)

https://www.fitchratings.com/site/re/883130

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/site/re/873395

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1014217

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1014217

Endorsement Policy

https://www.fitchratings.com/regulatory

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Fitch Ratings
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Source: Fitch Ratings

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