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Rating Action:

Moody's Upgrades Two and Affirms 11 CMBS Classes of MSDWC 2001-TOP5

30 Mar 2011

Approximately $573.9 Million of Structured Securities Affected

New York, March 30, 2011 -- Moody's Investors Service (Moody's) upgraded the ratings of two classes and affirmed 11 classes of Morgan Stanley Dean Witter Capital I Trust 2001-TOP 5, Commercial Mortgage Pass-Through Certificates, Series 2001-TOP5 as follows:

Cl. A-4, Affirmed at Aaa (sf); previously on Dec 27, 2001 Definitive Rating Assigned Aaa (sf)

Cl. X-1, Affirmed at Aaa (sf); previously on Dec 27, 2001 Definitive Rating Assigned Aaa (sf)

Cl. B, Affirmed at Aaa (sf); previously on Aug 16, 2005 Upgraded to Aaa (sf)

Cl. C, Affirmed at Aaa (sf); previously on Sep 25, 2008 Upgraded to Aaa (sf)

Cl. D, Upgraded to Aa1 (sf); previously on Sep 25, 2008 Upgraded to Aa2 (sf)

Cl. E, Upgraded to A3 (sf); previously on Feb 12, 2007 Upgraded to Baa1 (sf)

Cl. F, Affirmed at Baa3 (sf); previously on Dec 27, 2001 Definitive Rating Assigned Baa3 (sf)

Cl. G, Affirmed at Ba1 (sf); previously on Dec 27, 2001 Assigned Ba1 (sf)

Cl. H, Affirmed at Ba2 (sf); previously on Dec 27, 2001 Assigned Ba2 (sf)

Cl. J, Affirmed at Ba3 (sf); previously on Dec 27, 2001 Assigned Ba3 (sf)

Cl. K, Affirmed at B1 (sf); previously on Dec 27, 2001 Assigned B1 (sf)

Cl. L, Affirmed at B2 (sf); previously on Dec 27, 2001 Assigned B2 (sf)

Cl. M, Affirmed at B3 (sf); previously on Dec 27, 2001 Assigned B3 (sf)

RATINGS RATIONALE

The upgrades are due to overall improved pool performance and increased credit subordination levels due to loan payoffs and amortization. The pool has amortized 29% since last review. The affirmations are due to key parameters, including Moody's loan to value (LTV) ratio, Moody's stressed debt service coverage ratio (DSCR) and the Herfindahl Index (Herf), remaining within acceptable ranges. Based on our current base expected loss, the credit enhancement levels for the affirmed classes are sufficient to maintain the existing ratings.

Moody's rating action reflects a cumulative base expected loss of 1.9% of the current balance. Moody's stressed scenario loss is 4.9% of the current balance. Moody's provides a current list of base and stress scenario losses for conduit and fusion CMBS transactions on moodys.com at http://v3.moodys.com/viewresearchdoc.aspx?docid=PBS_SF215255. Depending on the timing of loan payoffs and the severity and timing of losses from specially serviced loans, the credit enhancement level for investment grade classes could decline below the current levels. If future performance materially declines, the expected level of credit enhancement and the priority in the cash flow waterfall may be insufficient for the current ratings of these classes.

Moody's analysis reflects a forward-looking view of the likely range of collateral performance over the medium term. From time to time, Moody's may, if warranted, change these expectations. Performance that falls outside an acceptable range of the key parameters may indicate that the collateral's credit quality is stronger or weaker than Moody's had anticipated during the current review. Even so, deviation from the expected range will not necessarily result in a rating action. There may be mitigating or offsetting factors to an improvement or decline in collateral performance, such as increased subordination levels due to amortization and loan payoffs or a decline in subordination due to realized losses.

Primary sources of assumption uncertainty are the current sluggish macroeconomic environment and varying performance in the commercial real estate property markets. However, Moody's expects to see increasing or stabilizing property values, higher transaction volumes, a slowing in the pace of loan delinquencies and greater liquidity for commercial real estate in 2011. The hotel and multifamily sectors are continuing to show signs of recovery, while recovery in the office and retail sectors will be tied to recovery of the broader economy. The availability of debt capital continues to improve with terms returning toward market norms. Moody's central global macroeconomic scenario reflects an overall sluggish recovery through 2012, amidst ongoing individual, corporate and governmental deleveraging, persistent unemployment, and government budget considerations.

The principal methodology used in this rating was "CMBS: Moody's Approach to Rating U.S. Conduit Transactions" published in September 2000.

Moody's review incorporated the use of the Excel-based CMBS Conduit Model v 2.50 which is used for both conduit and fusion transactions. Conduit model results at the Aa2 level are driven by property type, Moody's actual and stressed DSCR, and Moody's property quality grade (which reflects the capitalization rate used by Moody's to estimate Moody's value). Conduit model results at the B2 level are driven by a pay down analysis based on the individual loan level Moody's LTV ratio. Moody's Herfindahl score (Herf), a measure of loan level diversity, is a primary determinant of pool level diversity and has a greater impact on senior certificates. Other concentrations and correlations may be considered in our analysis. Based on the model pooled credit enhancement levels at Aa2 and B2, the remaining conduit classes are either interpolated between these two data points or determined based on a multiple or ratio of either of these two data points. For fusion deals, the credit enhancement for loans with investment-grade underlying ratings is melded with the conduit model credit enhancement into an overall model result. Fusion loan credit enhancement is based on the credit estimate of the loan which corresponds to a range of credit enhancement levels. Actual fusion credit enhancement levels are selected based on loan level diversity, pool leverage and other concentrations and correlations within the pool. Negative pooling, or adding credit enhancement at the underlying rating level, is incorporated for loans with similar credit estimates in the same transaction.

Moody's ratings are determined by a committee process that considers both quantitative and qualitative factors. Therefore, the rating outcome may differ from the model output.

The rating action is a result of Moody's on-going surveillance of commercial mortgage backed securities (CMBS) transactions. Moody's monitors transactions on a monthly basis through two sets of quantitative tools -- MOST® (Moody's Surveillance Trends) and CMM (Commercial Mortgage Metrics) on Trepp -- and on a periodic basis through a comprehensive review. Moody's prior full review is summarized in a press release dated February 12, 2007. Please see the ratings tab on the issuer / entity page on moodys.com for the last rating action and the ratings history.

Moody's Investors Service did not receive or take into account a third-party due diligence report on the underlying assets or financial instruments related to the monitoring of this transaction in the past six months.

DEAL PERFORMANCE

As of the March 15, 2011 distribution date, the transaction's aggregate certificate balance has decreased by 44% to $583.8 million from $1.04 billion at securitization. The Certificates are collateralized by 107 mortgage loans ranging in size from less than 1% to 8% of the pool, with the top ten non-defeased loans representing 37% of the pool. The pool contains one loan, representing 8% of the pool, with an investment grade credit estimate. Twenty-nine loans, representing 25% of the pool, have defeased and are secured by U.S. Government securities. The pool has significant near-term refinance risk, as loans representing 71% of the non-defeased pool mature within the next 12 months.

Twenty-nine loans, representing 22% 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 CRE Finance Council (CREFC) 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.

Two loans have been liquidated from the pool since securitization, resulting in an aggregate $542,002 loss (8% loss severity on average). Four loans, representing 2% of the pool, are currently in special servicing. Moody's has estimated an aggregate $3.4 million loss (32% expected loss on average) for the specially serviced loans.

Moody's has assumed a high default probability for one performing loan representing 0.2% of the pool and has estimated a $155,346 loss (15% expected loss based on a 30% probability default) from this troubled loan.

Moody's was provided with full year 2009 and partial year 2010 operating results for 94% and 86%, respectively, of the pool's non-defeased loans. Excluding specially serviced and troubled loans, Moody's weighted average LTV is 65% compared to 71% at Moody's prior full review. Moody's net cash flow reflects a weighted average haircut of 14% to the most recently available net operating income. Moody's value reflects a weighted average capitalization rate of 9.9%.

Excluding specially serviced and troubled loans, Moody's actual and stressed DSCRs are 1.66X and 1.85X, respectively, compared to 1.62X and 1.44X at Moody's prior full review. Moody's actual DSCR is based on Moody's net cash flow (NCF) and the loan's actual debt service. Moody's stressed DSCR is based on Moody's NCF and a 9.25% stressed rate applied to the loan balance.

Moody's uses a variation of 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 risk of multiple notch downgrades under adverse circumstances. The credit neutral Herf score is 40. The pool has a Herf of 32 compared to 48 at Moody's prior full review.

The loan with a credit estimate is the Manufactured Home Communities Portfolio Loan ($44.0 million -- 7.5%), which is secured by seven manufactured housing communities located in Florida (3), suburban Phoenix (2), suburban Denver and Las Vegas. The portfolio totals 2,105 units and each community has a full complement of amenities. As of December 2009, the portfolio was 90% leased, essentially the same as at last review. Property performance has improved due to increased rental income and the loan is benefiting from amortization. The loan has paid down 7% since last full review and matures in September 2011. Moody's current credit estimate and stressed DSCR are A3 and 1.62X, respectively, compared to Baa3 and 1.41X at last full review.

The top three performing conduit loans represent 13% of the pool balance. The largest loan is the Great American Technical Center Loan ($30.8 million -- 5.3%), which is secured by two office/R&D buildings totaling 237,000 square feet (SF) located in Santa Clara, California. The property is part of the 5.5 million SF Marriott Business Park. The properties are 100% leased to two tenants: Broadcom (58% of the net rentable area (NRA); lease expiration November 2012) and Data Domain (42% of the NRA; lease expiration June 2018). Property performance has improved since last review when Broadband was the sole tenant following two tenants vacating. The loan is also benefiting from amortization, paying down 11% since last full review, and matures in November 2011. Moody's analysis reflects a stressed cash flow due to our concerns about the property refinancing with significant lease rollover in 2012, as well as a soft Santa Clara office/R&D market. Moody's LTV and stressed DSCR are 56% and 2.04X, respectively, compared to 91% and 1.24X at last full review.

The second largest loan is the Great Western Savings Building Loan ($25.1 million -- 4.3%) , which is secured by a 153,000 SF Class A office building located in downtown Berkeley, California. As of January 2010, the property was 92% leased compared to 86% at last full review. Major tenants include MPR Associates, Inc. (17% of the NRA; lease expiration October 2012) and Cadence Systems (14% of the NRA; lease expiration October 2012). Property performance has improved since last review due to increased base rent and is stable. The loan is benefiting from amortization, paying down 6% since last review, and matures in October 2011. Moody's LTV and stressed DSCR are 63% and 1.71X, respectively, compared to 81% and 1.34X at last full review.

The third largest loan is the Lake Mary Centre Loan ($22.2 million -- 3.8%), which is secured by a 339,000 SF community retail center located near Orlando in Lake Mary, Florida. The property is anchored by K-Mart, which leases 26% of the property's NRA through August 2013, and Albertson's, which leases 19% of the NRA through June 2012. The center was 96% leased as of September 2010, similar to at last full review. Property performance is stable and the loan is benefiting from amortization. The loan has paid down 6% since last full review and matures in November 2011. Moody's LTV and stressed DSCR are 62% and 1.62X, respectively, compared to 68% and 1.47X at last full review.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings, public information, confidential and proprietary Moody's Investors Service information, and confidential and proprietary Moody's Analytics information.

Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating.

Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

New York
Tiffany Putman
Associate Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Sandra Ruffin
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Upgrades Two and Affirms 11 CMBS Classes of MSDWC 2001-TOP5
No Related Data.
© 2018 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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