Fitch Upgrades 5 Classes of MSC 2003-IQ4

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has upgraded five and affirmed two classes of Morgan Stanley Capital I Trust's (MSCI) commercial mortgage pass-through certificates series 2003-IQ4. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrades are the result of increasing credit enhancement from continued paydown, stable performance of the underlying collateral and decreasing loan leverage due to generally strong amortization periods. Fitch modeled losses of 16.3% of the remaining pool; expected losses on the original pool balance total 1.6%, including $7 million (1% of the original pool balance) in realized losses to date. Fitch has designated four loans (46.3%) as Fitch Loans of Concern, two of which are specially serviced assets (32.7%). As of the October 2015 distribution date, the pool's aggregate principal balance has been reduced by 96.2% to $28 million from $727.8 million at issuance. One loan (1.6%) is defeased. Interest shortfalls are currently affecting classes M through O.

The largest contributor to expected losses is the specially-serviced North Mayfair loan (18.2% of the pool), which is secured by a 101,286 sf office building located in Wauwatosa, WI. The loan transferred to special servicing upon maturity default in December 2012 and became real estate owned (REO) in December 2014. The special servicer continues to focus on marketing and leasing the property. The property's occupancy was reported as 59% as of July 2015.

The next largest contributor to expected losses is the specially-serviced Spinnaker Plaza loan (14.5%), which is secured by a mixed-use property with 27,000 sf of ground floor office and retail space and 32 apartment units above on a ground lease, located in Milford, CT. The loan transferred to special servicing in November 2012 due to monetary default and became REO as of May 2014. The property is currently listed for sale. The property's occupancy was reported as 79% as of December 2014.

RATING SENSITIVITIES

Rating Outlooks on classes G through K are Stable due to sufficient credit enhancement and continued paydown. Fitch ran additional stresses when considering upgrades. Although credit enhancement remains high relative to the rating category, further upgrades were limited due to increasing pool concentration and smaller than average subordinate class sizes. Any increase in expected losses may have a greater impact on credit enhancement.

DUE DILIGENCE USAGE

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

Fitch upgrades the following classes and revises REs as indicated:

--$4.9 million class G to 'AAAsf' from 'AAsf'; Outlook Stable;

--$8.2 million class H to 'Asf' from 'BBBsf'; Outlook Stable.

--$3.6 million class J to 'BBBsf' from 'BBsf'; Outlook Stable;

--$1.8 million class K to 'BBsf' from 'Bsf'; Outlook Stable;

--$5.5 million class L to 'CCCsf' from 'CCsf'; RE 90%;

Fitch affirms the following classes as indicated:

--$1.8 million class M at 'CCsf'; RE 0%;

--$1.8 million class N at 'Csf'; RE 0%.

The class A-1, A-2, B, C, D, E and F certificates have paid in full. Fitch does not rate class O certificates. Fitch previously withdrew the ratings on the interest-only class X-1 and X-2 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. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (pub. 10 Dec 2014)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608

Additional Disclosures

Dodd-Frank Rating Information Disclosure Formhttps://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=993025

Solicitation Statushttps://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=993025

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/20151028006441/en/

Fitch Ratings
Primary Analyst:
Catherine Barbieri, +1-212-908-0638
Associate Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson:
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations:
Sandro Scenga, +1-212-908-0278
New York
[email protected]

Source: Fitch Ratings

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