Fitch Affirms MSCI 1998-HF2

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed four classes of Morgan Stanley Capital I Trust's commercial mortgage pass-through certificates, series 1998-HF2. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations reflect stable performance since the last rating action with 41.9% of the pool (six loans) defeased according to servicer reporting. The pool has experienced $28.3 million (2.7% of the original pool balance) in realized losses to date.

As of the February 2016 distribution date, the pool's aggregate principal balance has been reduced by 97.3% to $28.2 million from $1.06 billion at issuance. The second largest loan (13.3% of pool) is defeased and matures in June 2016, 2% matures in 2017, and 60.4% matures in 2018. Interest shortfalls are currently affecting classes L through N.

The largest loan in the pool is a retail center in Pleasant Hill, CA. The property has been 100% occupied for the last several years and is anchored by Staples (29.1% net rentable area [NRA], expiration Oct. 2016), Rite Aid (23.5% NRA, expiration Nov. 2016), and Smart & Final (17.5% NRA, expiration Nov. 2016). Per the borrower, both Staples and Smart & Final plan on staying at the property. Currently, Rite Aid has not provided notice of renewal but has until May to confirm. The debt service coverage ratio (DSCR) was stable at 1.76x as of YE 2015. The loan is scheduled to mature in 2018.

Eight of the remaining nine non-defeased loans (53.4% of the pool) are represented by retail properties. A portion of the retail exposure consists of five single-tenant drug store assets (7.0% of the pool) including one Walgreens and four CVS stores, all located in secondary or tertiary markets.

RATING SENSITIVITIES

Classes J and K are expected to remain stable due to high credit enhancement and continued expected paydown. Downgrades are not expected on classes J and K, as the performance of the remaining pool has been stable with no loans in special servicing. Upgrades are not expected to class K as the pool has become concentrated. In addition, class L, which has previously taken losses, should be sufficient to absorb potential losses.

DUE DILIGENCE USAGE

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

Fitch has affirmed the following classes:

--$8.9 million class J at 'AAAsf', Outlook Stable;

--$10.6 million class K at 'BBBsf', Outlook Stable;

--$8.7 million class L at 'Dsf', RE 90%;

--$0 class M at 'Dsf', RE 0%.

The class A-1, A-2, B, C, D, E, F, G and H certificates have paid in full. Fitch does not rate the class N certificates. Fitch previously withdrew the rating on the interest-only class X certificates.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395

Additional Disclosures

Dodd-Frank Rating Information Disclosure Formhttps://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=999949

Solicitation Statushttps://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=999949

Endorsement Policyhttps://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160224006448/en/

Fitch Ratings
Primary Analyst:
Martin Nunnally, +1-212-908-0871
Associate Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson:
Karen Trebach, +1-212-908-0215
Senior Director
or
Media Relations:
Sandro Scenga, +1-212-908-0278
New York
[email protected]

Source: Fitch Ratings

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