Fitch Upgrades One Class of MSCI 2005-HQ6

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has upgraded one and affirmed eight classes of Morgan Stanley Capital I Trust, commercial mortgage pass-through certificates, series 2005-HQ6 (MSCI 2005-HQ6). A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The upgrade reflects increased credit enhancement from the resolution of all five of the specially serviced loans/assets at better recoveries than previously modeled at Fitch's last rating action. There are currently no specially serviced loans or loans on the master servicer's watchlist.

Rating Cap: Due to concerns of pool concentration and adverse selection, a rating cap of 'Bsf' was considered appropriate for class H. Only three loans remain, compared to the original 177 loans at issuance. The two largest loans (84% of pool) are secured by multifamily properties with a related sponsor and the smallest of the remaining loans is secured by a grocery-anchored retail shopping center (16%). All three of these properties are located in secondary and tertiary markets.

As of the October 2016 distribution date, the pool's aggregate principal balance has been reduced by 98.9% to $29.5 million from $2.75 billion at issuance. Total realized losses are 5.7% of the original pool balance. Cumulative interest shortfalls totaling $11.2 million are currently impacting classes J through S.

The largest loan, The Mission Bay Apartments, a 361-unit property located in Viera, FL (approximately 50 miles southeast of Orlando), was 97% occupied as of the June 2016 rent roll. The second largest loan, Hunters Run Apartments, a 304-unit property located in Middleburg, FL (approximately 30 miles southwest of Jacksonville, FL), was 95.7% occupied as of the June 2016 rent roll. Property performance and cash flow has been stable to improving for these two multifamily loans. Both of these loans mature in April 2018.

The smallest remaining loan, The Old Bakery Place Shopping Center, a 68,627 square foot retail property located in Bristol, VA, was 94.3% occupied as of the June 2016 rent roll. The property is anchored by K-V-A-T Food Stores (operating as a Food City; 71.5% of net rentable area) with a lease expiring in March 2030, which is beyond the loan's March 2020 maturity.

RATING SENSITIVITIES

The Stable Rating Outlook of class H reflects stable collateral performance. Although credit enhancement will increase with continued scheduled amortization, Fitch is concerned with pool concentration and collateral quality of the remaining three loans; therefore, a rating cap of 'Bsf' was considered appropriate for this concentrated pool. Fitch does not foresee positive or negative rating migration unless there is material economic change to the remaining loans.

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 upgraded and assigned a Rating Outlook to the following class:

--$11.2 million class H to 'Bsf' from 'CCCsf'; assign Outlook Stable.

In addition, Fitch has affirmed the following classes:

--$18.3 million class J at 'Dsf'; RE 35%;

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

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

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

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

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

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

--$0 class Q at 'Dsf'; RE 0%.

The class A-1, A-1A, A-2A, A-2B, A-AB, A-3, A-4A, A-4B, A-J, B, C, D, E, F, and G certificates have paid in full. Fitch does not rate the class S 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

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=1014557

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1014557

Endorsement Policy

https://www.fitchratings.com/regulatory

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Fitch Ratings
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Melissa Che
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Fitch Ratings, Inc.
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or
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or
Media Relations
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Source: Fitch Ratings

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