Fitch Affirms MSCI 2006-XLF

Fitch Ratings has affirmed Morgan Stanley Capital I Inc. (MSC 2006-XLF) commercial mortgage pass-through certificates, series 2006-XLF. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

Affirmations reflect stabilizing performance of the remaining loan in the pool.

The remaining loan in the transaction is the ResortQuest Kauai, a 311-room full-service hotel located on a fee-simple beach-front parcel of land in the city of Kapaa, along the east coast of the island of Kauai, HI. The hotel was rebranded as the Courtyard by Marriott Kauai at Coconut Beach subsequent to acquisition.

The property was sold in October 2010 and the note assumed for $38 million, which resulted in a $5.2 million realized loss to the N-RQK non pooled rake bond. In conjunction with the sale, the loan was modified with a maturity extension to November 2015 and the establishment of capex and debt service reserves. New sponsorship contributed an estimated $13 million to the renovation of the hotel.

Performance of the hotel has continued to improve subsequent to the rebranding and renovation of the hotel coupled with greater tourism demand on the island. As of December 2014, net operating income grew 36% to $3.7 million from $2.7 million at year-end 2013. Performance is expected to improve albeit at a slower pace as the hotel approaches stabilization.

For December 2014, the hotel achieved TTM occupancy, ADR, and RevPAR of 81.7%, $138.42, and $113.14, respectively, compared to the prior year performance of 80.0%, $123.78, and $99.07. Despite the improvement, the hotel continues to trail its competitive set with reported TTM year-end 2014 occupancy, ADR, and RevPAR of 77.2%, $197.35 and $152.37. Also, the hotel has yet to achieve the underwritten stabilized projections for occupancy, ADR, and RevPAR of 81.1%, $165 and $134.

RATING SENSITIVITY

Stable Rating Outlooks reflect improving performance of the hotel and sufficient credit support from subordinate classes. Affirmations are likely unless there is unexpected performance decline. The classes with realized losses will remain at 'D'.

Fitch affirms the ratings on the following pooled certificates:

--$22.1 million class J at 'BBBsf'; Outlook Stable;

--$6.8 million class K at 'Bsf'; Outlook to Stable from Negative;

--$5.1 million class L at 'Dsf; RE 100%;

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

Fitch affirms the ratings on the following non-pooled component certificates:

--$4 million class N-RQK at 'Dsf'; RE 40%.

Classes A-1 through H, N-SDF, N-LAF and O-LAF have been paid in full. The ratings of interest-only classes X-1 and X-2 were previously withdrawn. Class M, currently rated 'Dsf'; RE 0%, is being affirmed and has been reduced to zero due to realized losses. Fitch does not rate the Class N-W40 certificates.

Additional information on Fitch's criteria for analyzing large loans in U.S. commercial mortgage transactions is available in the Sept. 19, 2014 report, Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions', which is available at 'www.fitchratings.com' under the following headers:

Structured Finance then CMBS then Criteria Reports

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

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (Aug. 4, 2014);

--'Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions' (Sept. 19, 2014).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389

Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=772328

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=981527

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