Fitch Affirms BSCMSI 2007-TOP28

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has affirmed 17 classes of Bear Stearns Commercial Mortgage Securities Trust (BSCMSI) commercial mortgage pass-through certificates series 2007-TOP28. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations reflect the overall stable performance of the pool. Fitch modeled losses of 5.1% of the remaining pool; expected losses on the original pool balance total 7%, including $55.9 million (3.2% of the original pool balance) in realized losses to date. Fitch has designated 44 loans (29.2%) as Fitch Loans of Concern, which includes one specially serviced asset (0.3%). There is a large retail exposure within the transaction as 58% of the pool is collateralized by retail properties, including nine of the top 15 loans and the largest loan in the pool, representing 12.7% of the collateral. Additionally, with 87.4% of the pool maturing in 2017, the transaction faces significant maturity risk.

As of the May 2016 distribution date, the pool's aggregate principal balance has been reduced by 24.1% to $1.34 billion from $1.76 billion at issuance. Per the servicer reporting, nine loans (7.4% of the pool) are defeased. Interest shortfalls are currently affecting classes G through P.

The largest contributor to expected losses is the Pavilions At Hartman Heritage loan (1.8% of the pool), which is secured by a 220,000 square foot (sf) retail property and is located in Independence, MO, within the Kansas City MSA. As of year-end (YE) 2015, occupancy was reported to be 70% and the debt service coverage ratio (DSCR) was reported to be 1.23x, slightly higher than the 1.19x reported at YE 2013. The interest only loan matures in August 2017. While the property saw an over 60% improvement in property cash flow between YE 2012 and 2011, the property is still performing significantly below expectations at issuance when occupancy was 92% and the DSCR was 2.06x. Occupancy, however, will improve in 2016 with Party City renewing their lease and expanding into a larger space at the property.

The specially serviced asset (0.31%) is a 60,266-sf suburban office property located in Longmont, CO, which is approximately 10 miles north of Boulder. The loan transferred to the special servicer in September 2015. The property's single tenant, Crocs, Inc., provided the borrower with notice that it intends to exercise its early termination option and vacate the property effective June 30, 2016. According to the special servicer, the borrower has failed to make a reserve deposit required by the loan documents and foreclosure has been initiated.

The largest loan in the pool is the Easton Town Center loan (12.7%), which is secured by 1,301,992-sf of retail/office space in a 1,708,992-sf anchored retail lifestyle center located in Columbus, OH. The interest-only loan matures in August 2017 and is pari-passu with a $110 million note in MSCI 2007-IQ16. The loan sponsors are Limited Brands, Inc., Steiner & Associates and The Georgetown Company. Included in the 1,301,992-sf of collateral is an office component encompassing 223,506-sf. The center is anchored by Macy's and Nordstrom, neither of which are part of the collateral. Of the 240 tenants that are included in the collateral, AMC Theaters is the largest. Other tenants include HH Gregg, Barnes & Noble, Louis Vuitton, Anthropologie, Burberry, Apple, The Lego Store, Pottery Barn, Sephora, J. Crew, Banana Republic and Talbots. Total center sales (excluding reported anchor and temporary tenants) for YE 2015 were $534.5 million ($539 per square foot (psf)) compared to $506.4 million ($522 psf) for YE 2014. Performance at the property has been stable. Occupancy for YE 2015 was reported to be 98%, which has been the same for the past three years. The YE 2015 DSCR improved to 2.60x from 2.56x at YE 2014 due to a net operating income (NOI) increase of 1.8%.

RATING SENSITIVITIES

The ratings on senior classes A-4 through A-J are expected to remain stable as these classes will benefit from increased credit enhancement as the pool continues to pay down. The Rating Outlooks on classes B and C remain Stable due to the continued stable performance of the pool. Upgrades to these classes, as well class A-J, may be warranted with continued paydown as the majority of the loans near their maturities in 2017. The distressed classes are subject to further downgrade as losses are realized.

DUE DILIGENCE USAGE

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

Fitch affirms the following classes:

--$801.3 million class A-4 at 'AAAsf'; Outlook Stable;

--$115.7 million class A-1A at 'AAAsf'; Outlook Stable;

--$176.1 million class A-M at 'AAAsf'; Outlook Stable;

--$114.5 million class A-J at 'BBBsf'; Outlook Stable;

--$30.8 million class B at 'BBsf'; Outlook Stable;

--$15.4 million class C at 'BBsf'; Outlook Stable;

--$28.6 million class D at 'CCCsf'; RE 100%;

--$22 million class E at 'CCsf'; RE 65%;

--$17.6 million class F at 'Csf'; RE 0%;

--$14.6 million class G at 'Dsf'; RE 0%;

--$0 class H at 'Dsf'; RE 0%;

--$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%.

The class A-1, A-2, A-3 and A-AB certificates have paid in full. Fitch does not rate the class P certificates. Fitch previously withdrew the ratings on the interest-only class X-1 and X-2 certificates.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 28 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748781

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1005508

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1005508

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160602006381/en/

Fitch Ratings
Primary Analyst
Daniel Anderson
Associate Director
+1-312-606-2305
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: [email protected]

Source: Fitch Ratings

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