Fitch Upgrades 6 Classes of MSC 2004-IQ7

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has upgraded six and affirmed three classes of Morgan Stanley Capital I Trust (MSC 2004-IQ7) commercial mortgage pass-through certificates series 2004-IQ7. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrades reflect increases in credit enhancement from amortization, pay down from maturing loans, and defeased collateral (26.8% of the pool). All loans are current, with no loans presently in special servicing.

As of the February 2016 distribution date, the pool's aggregate principal balance has been reduced by 95.7% to $37.5 million from $863 million at issuance. Interest shortfalls are currently affecting class O.

There are 18 loans remaining out of the original 128 loans at issuance. Of the remaining loans, 12 loans (44.8% of the pool) are secured by cooperative housing properties, which are predominantly located in New York, NY. 22.5% of the remaining, non-defeased loans are fully amortizing and reflect substantial pay down since issuance. The pool is concentrated with the largest loan, Linden Place Office Building, accounting for 37% of the remaining pool balance.

The Linden Place Office Building loan is collateralized by an approximately 146,000 square foot (sf) office building in Omaha, NE. The property reflects stable performance with occupancy of 100% as of year-end 2014, up from 95.4% a year earlier. The year-end 2014 debt service coverage ratio (DSCR) also increased to 1.85x, from 1.70x a year earlier.

RATING SENSITIVITIES

The Stable Outlooks reflect the stable performance of the pool, continued amortization, defeasance and strong credit profile of the underlying collateral. Downgrades are not likely as the pool continues to amortize and credit enhancement is expected to increase. Upgrades are not likely to lower classes due to the thinner tranche sizes and increased concentration..

DUE DILIGENCE USAGE

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

Fitch upgrades the following classes and assigns Outlooks as indicated:

--$5.4 million class H to 'AAAsf' from 'AAsf', Outlook Stable;

--$4.3 million class J to 'AAsf' from 'Asf', Outlook Stable;

--$2.2 million class K to 'Asf' from 'BBBsf', Outlook Stable;

--$2.2 million class L to 'BBBsf' from 'BBsf', Outlook Stable;

--$2.2 million class M to 'BBsf' from 'Bsf', Outlook Stable;

--$2.2 million class N to 'BBsf' from 'Bsf', Outlook Stable.

Fitch affirms the following class as indicated:

--$4.5 million class E at 'AAAsf', Outlook Stable;

--$5.4 million class F at 'AAAsf', Outlook Stable;

--$4.3 million class G to at 'AAAsf', Outlook Stable.

Classes A-1, A-2, A-3, A-4, B, C, and D certificates have paid in full. Fitch does not rate the class O certificates. Fitch previously withdrew the ratings on the interest-only class X-1 and X-Y 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 Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=999613

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=999613

Endorsement Policy

https://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/20160217006641/en/

Fitch Ratings
Primary Analyst
David Ro
Director
+1-312-368-3132
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Hannah James, New York, + 1 646-582-4947
[email protected]

Source: Fitch Ratings

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