Fitch Takes Various Actions on BSCMS 2004-PWR5

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has upgraded five, downgraded one, and affirmed four classes of Bear Stearns Commercial Mortgage Securities Trust, commercial mortgage pass-through certificates, series 2004-PWR5 (BSCMS 2004-PWR5). A full list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The upgrades reflect an increase in credit enhancement due to $30.4 million in loan repayments since the last rating action. The downgrade reflects a greater certainty of loss on the specially serviced assets. Fitch modeled losses of 7.2% of the remaining pool; expected losses on the original pool balance total 1.8%, including $15.9 million (1.3% of the original pool balance) in realized losses to date.

As of the July 2015 distribution date, the pool's aggregate principal balance has been reduced by 93.4% to $81.3 million from $1.2 billion at issuance. Of the original 131 loans, 12 currently remain, of which the two largest (63.8% of pool) are defeased and two others are in special servicing and real-estate owned (REO; 7.2%). The defeased loans have maturity dates in 2019, while the eight remaining non-specially serviced loans have final maturities in 2019 (four loans, 10.2% of pool), 2024 (three loans; 12.8%), and 2034 (this one loan passed its August 2014 anticipated repayment date, 6%).

The largest contributor to Fitch-modeled losses is the specially-serviced Pottsburg Plaza asset (4.4% of pool), which is a 35,905 square foot (sf) neighborhood retail center located in Jacksonville, FL, consisting of two buildings: a 13,905 sf free-standing Walgreens building and a 22,000 sf in-line retail building. The loan was transferred to special servicing in May 2014 due to maturity default and the asset became REO in March 2015. As of the June 2015 rent roll, the asset was 49.8% occupied by four tenants, with the in-line building being only 18% occupied. Walgreens' lease expires in 2056; however, the tenant has a termination option in 2016. Property management is working to clean up the property in an effort to enhance lease-up.

The next largest contributor to Fitch-modeled losses is the specially-serviced Campbell Station Shopping Center asset (2.8%), which is a 28,028 sf unanchored retail strip center located in Spring Hill, TN. The loan was transferred to special servicing in May 2014 due to maturity default and became REO in February 2015. As of May 2015, the asset was 67% occupied compared to 59% at year-end 2014. The two largest tenants, combined for 24% of the square footage, are on month-to-month leases. The special servicer is currently working with a potential tenant on finalizing lease terms. Once the lease has been finalized and approved, the asset is expected to be marketed for sale.

RATING SENSITIVITIES

The Stable Outlooks on classes E through K reflect increasing credit enhancement and expected continued paydown. Further upgrades were limited due to the continued risk of adverse selection as the pool becomes increasingly concentrated and the long-dated loan maturities in 2019 and beyond. The distressed classes (those rated below 'Bsf') may be subject to further downgrades as additional losses are realized.

DUE DILIGENCE USAGE

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

Fitch has upgraded the following classes and assigned Rating Outlooks as indicated:

--$9.3 million class G to 'AAAsf' from 'Asf'; Outlook Stable;

--$18.5 million class H to 'AAsf' from 'BBsf'; Outlook Stable;

--$4.6 million class J to 'BBsf' from 'CCCsf'; assign Outlook Stable;

--$4.6 million class K to 'Bsf' from 'CCCsf'; assign Outlook Stable;

--$6.2 million class L to 'CCCsf' from 'CCsf;' RE 100%.

Fitch has downgraded the following class:

--$4.6 million class N to 'Csf' from 'CCsf'; RE 15%.

Fitch has affirmed the following classes:

--$12.4 million class E at 'AAAsf'; Outlook Stable;

--$15.4 million class F at 'AAAsf'; Outlook Stable;

--$4.6 million class M at 'CCsf'; RE 100%;

--$1.1 million class P at 'Dsf'; RE 0%.

The class A-1, A-2, A-3, A-4, A-5 B, C and D certificates have paid in full. Fitch does not rate the fully-depleted class Q 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

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

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

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (pub. 10 Dec 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=988763

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=988763

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/20150730006230/en/

Fitch Ratings
Primary Analyst
Melissa Che
Director
+1-212-612-7862
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Karen Trebach
Senior Director
+1-212-908-0215
or
Media Relations:
Alyssa Castelli, New York, +1 212-908-0540
Email: [email protected]

Source: Fitch Ratings

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