Fitch Upgrades One Distressed Class of MSC 1999-CAM1

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has upgraded one and affirmed one class of Morgan Stanley Capital I Trust 1999-CAM1 (MSC 1999-CAM1). A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The upgrade of class M is a result of declining loss expectations given the increased credit enhancement, continued relatively stable performance of the six remaining loans and continued expected paydown.

As of the April 2016 distribution date, the pool balance has been reduced by 99.4% to $4.7 million from $806.5 million at issuance with only six of the 152 original loans remaining. There are no defeased loans and three loans totaling 7.7% of the pool are fully amortizing. There are five loans (39%) which are single-tenant retail properties. Maturity dates are in 2016 (0.6%), 2017 (38.4%), and 2018 (61%). Classes N through O have prior incurred unpaid interest shortfalls. There are no delinquent or specially serviced loans.

The largest loan (61%) is secured by a 79,038 square foot (sf) medical office property located in Fairfax, VA. Reported occupancy declined over the last few years. As of year-end (YE) 2014, occupancy was 78% - a slight improvement compared to 76% in 2013 - but lower than 87% in 2012. The property is occupied mostly by doctors and medical-related tenants as it is located adjacent to the Inova Fair Oaks Hospital. Although occupancy has declined, the loan's debt service coverage ratio (DSCR) remains high at 2.67x as of YE 2014. The loan is currently on the master servicer's watchlist due to a lack of occupancy updates provided by the borrower. Leases with two of the larger tenants comprising approximately 14% of net rentable area (NRA) were scheduled to expire in 2015. The balloon loan matures in August 2018.

The second largest loan (23.9%) is secured by an 11,200 sf single-tenant retail building located in Tampa, FL. The building is fully leased by CVS through June 2017. According to the master servicer, CVS has subleased their entire space to Spanish grocer National Supermarket through the end of their lease term, which is just prior to the loan's August 2017 maturity. The loan is on the watchlist for both deferred maintenance issues and the upcoming expiration of the sublease. According to servicer commentary, the borrower states that the deferred maintenance issues have been corrected. At lease expiration, the loan's balance will be approximately $82 psf.

RATING SENSITIVITIES

Further upgrades were not considered due to the concentration of single-tenant retail properties, several of which have tenants with lease expirations prior to loan maturity. While not expected, downgrades to class M are possible if expected or realized losses increase. Class N will remain at 'Dsf', as losses have been realized.

DUE DILIGENCE USAGE

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

Fitch has upgraded the following class and revised the Recovery Estimate (RE) as indicated:

--$4.6 million class M to 'CCCsf' from 'Csf'; RE 100%.

Fitch has affirmed the following class:

--$0.3 million class N at 'Dsf'; RE 0%.

Classes A-1 through L have paid in full. Fitch does not rate class O. Fitch previously withdrew its rating on the interest-only class X.

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 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

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=1004337

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1004337

Endorsement Policy

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

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View source version on businesswire.com: http://www.businesswire.com/news/home/20160511006508/en/

Fitch Ratings
Primary Analyst
Stephanie Duski
Analyst
+1-646-582-4820
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Britt Johnson
Senior Director
+1-312-606-2341
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: [email protected]

Source: Fitch Ratings

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