Fitch Upgrades 1 Class of BSCMSI 2005-TOP18

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has upgraded one class and affirmed 10 classes of Bear Stearns Commercial Mortgage Securities Inc. commercial mortgage pass-through certificates series 2005-TOP18 (BSCMSI 2005-TOP18). A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The upgrade to class E reflects sufficient credit enhancement and continued paydown of the transaction. The affirmations reflect stable performance since Fitch's last rating action. The pool is concentrated with only 16 loans remaining, which includes one specially serviced asset (3.1% of the pool). One loan is defeased (3.8%). Fitch modeled losses of 7.9% of the remaining pool; expected losses on the original pool balance total 2.5%, including $24 million (2.1% of the original pool balance) in realized losses to date.

As of the August 2016 distribution date, the pool's aggregate principal balance has been reduced by 95.9% to $45.5 million from $1.12 billion at issuance. Interest shortfalls are currently affecting classes H through P.

The largest contributor to expected losses is secured by a 91,609 square foot (sf) mixed-use property located Akron, OH (18.8%). The office component, which accounts for 98% of the net rentable area, is leased to a healthcare company through November 2016. There have been discussions regarding an extension between the tenant and the borrower, but nothing has been agreed upon. There is also ground-level retail space that is leased through July 2017. The servicer reports that the borrower is also attempting to refinance the loan prior to its anticipated repayment date in March 2017. The debt service coverage ratio DSCR was reported to be 1.20x as of YE 2014 which is in-line with the 1.18x reported at YE 2013. Due to the uncertainty regarding the lease with the largest tenant, Fitch applied a conservative analysis to account for the potential of the tenant vacating.

The next largest contributor to expected losses is the specially-serviced asset (3.1%), which is secured by a 14,063 sf retail property located in Indianapolis, IN. The subject was transferred to special servicing in October 2014 for imminent payment default. A receiver was appointed by the court in July 2015 and foreclosure was completed in April 2016. Per the servicer, the asset is under contract for sale with an anticipated closing date in September 2016. According to the June 2016 rent roll, the property is 67% occupied.

The largest loan in the pool (21.9%) is secured by a portfolio of two properties: a 160,120 sf industrial property in Allen, TX and a 91,868 sf office property in Sunnyvale, CA. The properties are 100% occupied by a publicly traded communications company. Leases at both properties expire in February 2020. As of YE 2015, the DSCR was reported to be 2.41x.

RATING SENSITIVITIES

The Outlooks of classes D through G remain Stable due to high levels of credit enhancement and continued paydown. Fitch anticipates that class D will be repaid from amortization in one year, after which class E will be most senior. Further upgrades for classes F and G may be warranted based on the performance of the remaining loans. Downgrades are not expected unless a material economic or asset level event negatively impacts the transaction's metrics.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10

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

Fitch upgrades the following class:

--$11.2 million class E to 'AAAsf' from 'Asf'; Outlook Stable.

Fitch affirms the following classes:

--$3.6 million class D at 'AAAsf'; Outlook Stable;

--$9.8 million class F at 'BBBsf'; Outlook Stable;

--$9.8 million class G at 'BBsf'; Outlook Stable;

--$8.4 million class H at 'CCCsf'; RE 90%;

--$2.7 million 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, A-AB, A-4, A-4FL, A-J, B and C certificates have paid in full. Fitch does not rate the class P certificates. Fitch previously withdrew the rating on the interest-only class X certificates.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 18 Jul 2016)

https://www.fitchratings.com/site/re/884963

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 16 Jun 2016)

https://www.fitchratings.com/site/re/882401

Global Structured Finance Rating Criteria (pub. 27 Jun 2016)

https://www.fitchratings.com/site/re/883130

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

https://www.fitchratings.com/site/re/873395

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1011074

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1011074

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/20160831006474/en/

Fitch Ratings
Primary Analyst
Daniel Anderson
Associate Director
+1-312-606-2305
Fitch Ratings, Inc.
70 West Madison
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

Source: Fitch Ratings

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