Fitch Takes Action On Commercial Classes

Fitch Ratings has taken various rating actions on 11 classes of Morgan Stanley Capital I Trust 2006-IQ11, commercial mortgage pass-through certificates. Ten classes were downgraded.

Fitch analyzed the transaction and calculated expected losses by assuming cashflows on each of the properties decline 15% from year-end 2007 and property values decline 35% from issuance. These loss estimates were reviewed in more detail for loans representing 50.9% of the pool and, in certain cases, revised based on additional information and/or property characteristics.

Approximately 12.9% of the mortgages are scheduled to mature within the next five years, with 10.3% maturing in 2011. In 2015 and 2016, 79.1% of the pool is scheduled to mature.

Fitch identified 39 loans of concern (14.3%) within the pool, 10 of which (7.3%) are specially serviced. Two of the specially serviced loans (4.5%) are within the transaction's top 15 loans, which comprises 41.2% of the total pool's unpaid principal balance.

Nine of the top 15 loans (31.3% of the pool) are expected to default during the term or at maturity, with loss severities ranging from approximately 1% to 38%. Of the top 15 loans, the largest contributors to maturity and term losses are Michigan Plaza (10.2% of the pool balance), Merritt Square Mall (3.6%) and the Guttman Retail Portfolio (1%).

The largest specially serviced asset is LeNature's Headquarters (3.6%), which is a 500,000 square-foot industrial facility in Phoenix, which transferred to the special servicer when the single tenant, LeNature, filed for bankruptcy and abandoned the space. The loan remains current under a forbearance agreement. The property has been re-tenanted by a large data warehousing firm and is 100% occupied under its long-term lease.

SOURCE: Fitch Ratings


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