Approximately $71.9 Million of Structured Securities Affected
New York, July 09, 2009 -- Moody's Investors Service affirmed the rating of one class, upgraded
two classes and downgraded one class of Morgan Stanley Mortgage Capital
I Inc., Commercial Mortgage Pass-Through Certificates,
Series 1999-RM1. The upgrades are due to increased credit
support due to principal amortization and payoffs. The pool has
paid down by 85% since Moody's last full review in September
2007. The downgrade is due to higher expected losses for the pool
resulting from increased leverage and anticipated losses from loans in
special servicing. The action is the result of Moody's on-going
surveillance of commercial mortgage backed securities ("CMBS")
As of the June 15, 2009 distribution date, the transaction's
aggregate certificate balance has decreased by approximately 92%
to $71.9 million from $859.4 million at securitization.
The Certificates are collateralized by 29 mortgage loans ranging in size
from less than 1% to 12% of the pool, with the top
10 loans representing 63% of the pool. Two loans,
representing 6% of the pool, have defeased and are secured
by U.S. Government securities.
Twelve loans, representing 32% of the pool, are on
the master servicer's watchlist. The watchlist includes loans
which meet certain portfolio review guidelines established as part of
the Commercial Mortgage Securities Association's monthly reporting
package. As part of our ongoing monitoring of a transaction,
Moody's reviews the watchlist to assess which loans have material
issues that could impact performance.
Eleven loans have been liquidated from the pool, resulting in a
realized loss of approximately $10 million. Three loans,
representing 12% of the pool, are currently in special servicing.
The largest specially serviced loan is the Willow Tree Loan ($5.1
million -- 7.1%), which is secured by a 67,800
square foot vacant office building located in Leonia, New Jersey.
The loan matured in November 2008. Moody's estimates an aggregate
loss of approximately $3 million (35% loss severity on average)
for the specially serviced loans.
Moody's was provided with year-end 2008 operating results for 90%
of the pool. Moody's loan to value ("LTV") ratio, excluding
defeased loans, is 77% compared to 69% at Moody's
last review. Moody's stressed debt service coverage ratio
("DSCR") is 1.62X compared to 1.73X at last
review. Moody's stressed DSCR is based on Moody's net
cash flow ("NCF") and a 9.25% stressed rate
applied to the loan balance.
Moody's uses a variation of the Herfindahl index ("Herf")
to measure diversity of loan size, where a higher number represents
greater diversity. Loan concentration has an important bearing
on potential rating volatility, including the risk of multiple-notch
downgrades under adverse circumstances. The credit neutral Herf
score is 40. The pool, excluding defeased loans, has
a Herf of 18 compared to 60 at last review.
The top three conduit loans represent 26% of the pool. The
largest loan is the Sybase Building Loan ($8.5 million -
12%), which is secured by a 96,000 square foot office
building located in Boulder, Colorado. The property is 100%
occupied by Sybase Corporation, the same as last review.
Moody's LTV is 66%, compared to 71%, at last
review. Moody's stressed DSCR is 1.75X compared to
1.53X at last review.
The second largest loan is the Green Ridge Heights Apartments Loan ($5.8
million - 8%), which is secured by a 309-unit
apartment complex located in Cleveland, Ohio. The property
was 97% occupied as of December 2008, essentially the same
as last review. Performance has improved due to increased rental
revenues. Moody's LTV is 86%, compared to 95%
at last review. Moody's stressed DSCR is 1.19X compared
to 1.03X at last review.
The third largest loan is the Comfort Suites Loan ($4.3
million - 6%), which is secured by a 120-key
limited service hotel located in Lexington, North Carolina.
The property has been on the servicer's watchlist since 2003 due
to poor performance and low DSCR. Moody's LTV is 178%,
compared to 136% at last review. Moody's stressed
DSCR is 0.73X compared to 0.92X at last review.
Moody's rating action is as follows:
-Class X, notational, affirmed at Aaa; previously
affirmed at Aaa on 9/26/2007
-Class H, $22,243,781, upgraded
to Aaa from Aa2; previously upgraded to Aa2 from A2 on 9/25/2008
-Class L, $6,445,000, upgraded to
Ba2 from B2; previously affirmed at B2 on 9/26/2007
-Class M, $8,594,000, affirmed at
B3; previously affirmed at B3 on 9/26/2007
-Class N, $8,593,000, downgraded
to Caa3 from Caa2; previously affirmed at Caa2 on 9/26/2007
Moody's monitors transactions on both a monthly basis through two
sets of quantitative tools: MOST® (Moody's Surveillance
Trends) and CMM on Trepp, and a periodic basis through a full review.
Moody's prior full review is summarized in a press release dated
September 26, 2007. Class H was upgraded after the full review
as part of a Q-Tool Portfolio review on September 25, 2008.
Due to the pool's low herf, two principal methodologies were used
in rating and monitoring this transaction: "CMBS: Moody's
Approach to Rating U.S. Conduit Transactions" dated September
15, 2000 and "CMBS: Moody's Approach to Rating Large
Loan/Single Borrower Transactions" dated July 7, 2000.
These methodologies can be found at www.moodys.com in the
Credit Policy & Methodologies directory, in the Ratings Methodologies
subdirectory. Other methodologies and factors that may have been
considered in the process of rating this issue can also be found in the
Credit Policy & Methodologies directory.
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service
Moody's Upgrades Two Classes and Downgrades One Class of MSCI 1999-RM1
Michael M. Gerdes
Senior Vice President
Structured Finance Group
Moody's Investors Service