Fitch Affirms MSC 2007-IQ13

Fitch Ratings has affirmed 18 classes of Morgan Stanley Capital I Trust (MSC 2007-IQ13) commercial mortgage pass-through certificates series 2007-IQ13. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations reflect sufficient credit enhancement of the remaining classes relative to Fitch's expected losses. Fitch modeled losses of 13.6% of the remaining pool; expected losses on the original pool balance total 14%, including $60 million (3.7% of the original pool balance) in realized losses to date. Fitch has designated 36 loans (35.8%) as Fitch Loans of Concern, which includes 13 specially serviced assets (11.5%).

As of the July 2014 distribution date, the pool's aggregate principal balance has been reduced by 23.6% to $1.25 billion from $1.64 billion at issuance. Per the servicer reporting, four loans (5.1% of the pool) are defeased.

The largest contributor to expected losses is the 75-101 Federal Street loan (16.8% of the pool), which is secured by two interconnected, class A office buildings composed of 811,687 square feet (sf) in Boston's financial district. The second largest tenant EnerNOC (4.7% of NRA) vacated and relocated its corporate headquarters to the Innovation District in June 2013. As of June 2014, occupancy for the building was 77%. Due to the decline in occupancy, cash flow has been insufficient to service the debt with servicer reported debt service coverage ratio (DSCR) as of March 2014 at 0.74x. As of May 2014, Reis reported the Central Business District submarket of Boston vacancy rate at 10.7% and asking rents of $53.18 psf compared to in-place rents of approximately $38 psf. Although losses were modeled for the loan, refinance and default risk is mitigated by strong loan structural features, institutional sponsorship and a central CBD location. As of July 2014, the loan is current and approximately $1.6 million remains in tenant reserves.

The next largest contributor to expected losses is a specially-serviced 1.2 million-sf, outlet mall (6.2%) in Hazelwood, MO, a suburb of St. Louis. The loan transferred to special servicing in October 2011 due to the borrower's inability to secure financing by the loan's maturity date. A deed-in-lieu of foreclosure was signed in August 2012. As of June 2014, servicer reported occupancy for the property was 78%. The servicer has made leasing progress by securing a new lease with Ross Dress for Less in addition to renewing Books-A-Million and Burlington Coat Factory; however, the mall continues to face challenges in tenant retention due to increased competition from two new outlet malls in nearby Chesterfield, MO. Recent tenants vacating the mall include Marshall's and Nascar Speedpark representing 9.1% of the NRA collectively. Approximately 25.9% of leases are scheduled to expire through the end of 2015.

The third largest contributor to expected losses is a specially serviced asset (1.6%), secured by a 119,898 sf retail property located in Ontario, CA. The loan transferred to special servicing in July 2010 for non-monetary default due to a change in property management and transfer of ownership without lender consent. The loan was scheduled for a foreclosure sale prior to the borrower filing for bankruptcy protection in July 2013. As of January 2014, occupancy for the property was 87%. The largest tenant, Platt College, occupies 35% of the property and has a lease expiring in July 2021, while the second largest tenant, West Coast Ultrasound, occupies 25% with lease expiration in May 2019.

RATING SENSITIVITY

Rating Outlooks on classes A-1A through A-4 remain Stable due to increasing credit enhancement and continued paydown of the classes. Class A-M, rated 'AAsf', continues to have a Stable Outlook. Fitch applied additional stresses to the REO ST. Louis Mills asset given the high concentration of lease expirations coupled with increased competition in the area. Should property performance deteriorate, a Negative Rating Outlook or rating action is possible. The distressed classes (those rated below 'B-sf') are subject to further downgrades as losses are realized.

Fitch affirms the following classes as indicated:

--$267.6 million class A-1A at 'AAAsf', Outlook Stable;

--$41.3 million class A-2 at 'AAAsf', Outlook Stable;

--$64 million class A-3 at 'AAAsf', Outlook Stable;

--$448.8 million class A-4 at 'AAAsf', Outlook Stable;

--$163.9 million class A-M at 'AAsf', Outlook Stable;

--$149.6 million class A-J at 'CCCsf', RE 70%;

--$32.8 million class B at 'CCCsf', RE 0%;

--$16.4 million class C at 'CCsf', RE 0%;

--$16.4 million class D at 'Csf', RE 0%;

--$14.3 million class E at 'Csf', RE 0%;

--$18.4 million class F at 'Csf', RE 0%;

--$14.3 million class G at 'Csf', RE 0%;

--$5.6 million class H at 'Dsf', RE 0%;

--$0 class J at 'Dsf', RE 0%;

--$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%.

Fitch does not rate the class O and P certificates. Class A-1 is paid in full. Fitch previously withdrew the ratings on the interest-only class X and X-Y certificates.

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 11, 2013 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' (May 24, 2013);

--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 11, 2013).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821

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

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=841474

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