Fitch Upgrades 5 classes of MSCI 2007-XLF

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has upgraded five classes and affirmed five classes of Morgan Stanley Capital I Trust series 2007-XLF (MSCI 2007-XLF). A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The transaction is extremely concentrated with only one loan remaining, the specially serviced HRO Hotel Portfolio loan, which is secured by five full service hotels (1,939 keys) located in Stamford, CT; Sonoma, CA; Norfolk, VA; Atlanta, GA; and Southfield, MI. The loan matured in October 2015 without repayment; however, the special servicer has indicated that the borrower is working towards a full refinance in early 2016.

Since the last rating action, the former Le Meridien Resort loan paid off in full ($10.8 million) while the HRO Hotel Portfolio loan received approximately $9 million in unscheduled pre-payments. Upgrades reflect the classes' increased credit enhancement as well as the slightly improving performance of the underlying hotel collateral.

The HRO Hotel Portfolio hotels currently operate under the Marriott, Hilton, Sheraton, and Westin flags. Per the TTM December 2015 STR reporting, the portfolio had a weighted average occupancy, ADR, and RevPAR of 71.4%, $129, and $93, respectively with the average RevPAR increasing 4% over the prior year. Average RevPAR penetration for the portfolio was below 100%, as of TTM December 2015.

RATING SENSITIVITIES

Due to the risk associated with a single borrower transaction secured by five hotels, several of which are located in secondary markets, and most of which are underperforming their competition, senior ratings have been capped at 'Asf'; further upgrades are unlikely.

Per the special servicer, the borrower is actively pursuing a refinance of the loan that would result in a full payoff by early 2016. Should the refinance fall through, and property performance decline, downgrades would be possible to classes D through H and M-HRO.

DUE DILIGENCE USAGE

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

Fitch has upgraded the following ratings:

--$5.6 million class D to Asf' from BBBsf; Outlook Stable;

--$27.4 million class E to 'Asf' from 'BBsf'; Outlook Stable;

--$26.3 million class F to 'BBBsf' from 'BBsf'; Outlook Stable;

--$26.6 million class G to 'BBsf' from 'CCCsf'; Assigned Stable Outlook;

--$13.5 million class H to 'Bsf' from 'CCCsf'; Assigned Stable Outlook;

Fitch has affirmed the following classes:

--$10.4 million class J at 'Dsf' RE 100%;

--$0 class K at 'Dsf' RE 0%;

--$0 class L at 'Dsf' RE 0%;

--$5.1 million class M-HRO at 'CCCsf'; RE 100%;

--$7.8 million class N-HRO at 'Dsf'; RE 50%.

Classes A-1 through C, M-MPK, M-STR, N-MPK, and N-STR have paid in full. Class M-BRL is not rated.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions (pub. 27 Aug 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=870009

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 28 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748781

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1004333

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1004333

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/20160511006485/en/

Fitch Ratings
Primary Analyst
Stacey McGovern
Director
+1-212-908-0722
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Sandro Scenga, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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