NEW YORK--(BUSINESS WIRE)-- Fitch Ratings upgrades one class of Morgan Stanley Capital I Trust Commercial Mortgage Pass-Through Certificates series 1999-RM1 due to stable performance since last Fitch review. A detailed list of rating actions follows the end of the press release.

The upgrade is due to increased credit enhancement due to paydown which is sufficient to offset Fitch expected losses. Fitch modeled losses of 3.5% of the remaining pool; expected losses of the original pool are at 1.9%, including losses already incurred to date. Fitch has designated seven loans (12.4%) as Fitch Loans of Concern due to poor performance. None of the remaining loans are specially serviced.

As of the June 2011 distribution date, the pool's aggregate principal balance has been paid down by approximately 94.6% to $46.6 million from $859.4 million at issuance. Two (18.1%) of the remaining 23 loans are defeased. Interest shortfalls are only affecting the non-rated class O with cumulative unpaid interest totaling $2.6 million.

Fitch stressed the cash flow of the remaining loans by applying a 5% reduction to 2009 or 2010 fiscal year-end net operating income, and applying an adjusted market cap rate between 8.10% and 9.5 % to determine value.

All the loans also underwent a refinance test by applying an 8% interest rate and 30-year amortization schedule based on the stressed cash flow. All of the loans are modeled to pay off at maturity, and could refinance to a debt-service coverage ratio (DSCR) above 1.25 times (x). The current weighted average DSCR is 1.49x.

The only contributor to Fitch modeled losses is a 20,745 square foot (SF) retail property located in Virginia Beach, VA. The property had been 100% vacant since the single tenant Regal Cinemas declared Bankruptcy and rejected the lease in January 2008. The property has signed a new lease with another movie operator which has opened May, 2011.

Fitch upgrades the following class as indicated:

--$8.6 million class J to 'AAA/LS3' from 'A+/LS3'; Outlook Stable.

Fitch affirms the following classes as indicated:

--$0.8 million class H at 'AAA/LS3'; Outlook Stable;

--$12.9 million class K at 'BBB/LS3'; Outlook Stable;

--$6.4 million class L at 'BBB-/LS3'; Outlook Stable;

--$8.6 million class M at 'B+/LS3'; Outlook Negative;

--$8.6 million class N at 'C/RR1'.

Classes A-1 through G have paid in full. Fitch does not rate the $0.7 million class O certificates.

Fitch withdraws the rating of interest-only class X (For additional information on the withdrawal of the rating on Class X, see 'Fitch Revises Practice for Rating IO & Pre-Payment Related Structured Finance Securities', dated June 23, 2010).

Additional information on Fitch's criteria for analyzing U.S. CMBS is available in the Nov. 17, 2010 report, 'Surveillance Methodology for U.S. Fixed-Rate CMBS 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. 13, 2010);

--'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions' (Nov. 17, 2010).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547326

Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=574208

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