OREANDA-NEWS. Fitch Ratings has upgraded one, downgraded two, and affirmed seven classes of Morgan Stanley Capital I Trust, commercial mortgage pass-through certificates, series 2005-HQ5 (MSCI 2005-HQ5). A full list of rating actions follows at the end of this press release.

KEY RATING DRIVERS
The upgrade reflects increased credit enhancement as a result of better recoveries than previously modeled from the liquidation of the remaining specially serviced assets in the pool since Fitch's last rating action. The downgrades reflect realized losses to those classes, which were reflected in the January remittance.

Since Fitch's last rating action, six specially serviced assets, which included a modified A/B note, were resolved and liquidated resulting in total losses of $26 million. Since issuance, realized losses for the transaction were $83.7 million (5.5% of the original pool balance).

As of the February 2016 distribution date, the pool's aggregate principal balance has been reduced by 99% to $17.2 million from $1.52 billion at issuance. Of the original 89 loans, the pool is concentrated with only three loans remaining, all of which are sponsored by Government Properties Trust (GPT). Cumulative interest shortfalls totaling $2.7 million are currently impacting classes J and K and classes N through Q.

The remaining GPT loans in the pool are secured by three office properties totaling 100,300 square feet located in Baton Rouge, LA, Charleston, SC, and Bakersfield, CA. The properties are each fully occupied by the General Services Administration (GSA). The loans mature in March 2020.

The Baton Rouge property is occupied by the Federal Court House on a lease until July 2019. The Charleston property is occupied by the Department of Veteran Affairs - VA Clinic on a lease until June 2019. The Bakersfield property is occupied by The Drug Enforcement Agency on a lease until March 2021; however, the tenant has the option to terminate its lease beginning April 2016 by providing at least a 90-day notice.

RATING SENSITIVITIES
Fitch revised the Rating Outlook on class F to Stable from Negative due to the senior payment priority in the capital structure, the stable performance of the remaining loans, and expected continued paydown. A further upgrade was not warranted due to the binary risk associated with the GSA single-tenancy at each of the remaining properties, as well as the single tenant at each of the properties either having a lease expiring prior to loan maturity or having the option to terminate its lease prior to loan maturity. A downgrade is unlikely unless occupancy or cash flow deteriorates significantly.

DUE DILIGENCE USAGE
No third-party due diligence was provided or reviewed in relation to this rating action.

Fitch has upgraded and revised Rating Outlook to the following class:

--$5.7 million class F to 'BBsf' from 'Bsf'; Outlook to Stable from Negative.

Fitch has downgraded the following classes:

--$11.5 million class G to 'Dsf' from 'CCCsf'; RE 75%;
--$0 class H to 'Dsf' from 'Csf'; RE 0%.

Fitch has affirmed the class the following classes and revised Rating Outlooks as indicated:

--$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%;
--$0 class O at 'Dsf'; RE 0%;
--$0 class P at 'Dsf'; RE 0%.

The class A-1, A-2, A-3, A-AB, A-4, A-J, B, C, D, and E certificates have paid in full. Fitch does not rate the class Q certificates. Fitch has previously withdrawn the ratings on the interest-only class X-1 and X-2 certificates.