Fitch Upgrades MSC 2004-IQ7

Fitch Ratings has upgraded eight 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 actual and expected increases in credit enhancement from amortization, paydown from maturing loans, and defeased collateral (21.5% of the pool). Fitch modeled losses of 3.9% of the remaining pool; expected losses on the original pool balance total 0.5%, including $1.3 million (0.2% of the original pool balance) in realized losses to date. Fitch has designated five loans (8.5%) as Fitch Loans of Concern, which includes two assets in special servicing (5.2%).

As of the March 2015 distribution date, the pool's aggregate principal balance has been reduced by 94% to $52.1 million from $863 million at issuance. Interest shortfalls are currently affecting class O.

There are 21 loans remaining out of the original 128 loans at issuance. Of the remaining loans, 14 loans (39.8% of the pool) are secured by cooperative housing properties, two of which are in special servicing.

The largest contributor to expected losses is secured by an 89 unit cooperative housing property (2.3% of the pool) located in Inkster, MI. The property is located in a troubled market in suburban Detroit and the loan was unable to refinance at maturity. The servicer is pursuing a note sale. Servicer reported occupancy as of February 2014 was 65%.

RATING SENSITIVITIES

The Outlooks remain Stable as the classes benefit from increasing credit enhancement, defeasance and continued delevering of the transaction through amortization, with 40% of the pool fully amortizing, and repayment of maturing loans. Fitch does not anticipate future downgrades barring any material performance declines. Any incurred losses are expected to be absorbed by the subordinate non-rated class O.

Fitch upgrades the following classes and assigns Outlooks as indicated:

--$9.4 million class E to 'AAAsf' from 'AAsf', Outlook Stable;

--$5.4 million class F to 'AAAsf' from 'Asf', Outlook Stable;

--$4.3 million class G to 'AAAsf' from 'Asf', Outlook Stable;

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

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

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

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

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

Fitch affirms the following class as indicated:

--$1.7 million class C at 'AAAsf', Outlook Stable;

--$6.8 million class D at 'AAAsf', Outlook Stable;

--$2.2 million class M at 'Bsf', Outlook Stable.

Classes A-1, A-2, A-3, A-4 and B 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 on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 10, 2014 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at 'www.fitchratings.com' under the following headers:

Structured Finance >> CMBS >> Criteria Reports

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (March 31, 2015);

--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 10, 2014).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864268

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=982356

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.