Fitch Upgrades 6 Classes of BSCMSI 2005-Top20

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has upgraded six classes and affirmed 12 classes of Bear Stearns Commercial Mortgage Securities Trust (BSCMS) commercial mortgage pass-through certificates series 2005-Top20. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrades are due to an increase in credit enhancement from paydown and the expectation that the transaction will continue to delever as maturing loans repay. Fitch modeled losses of 3.8% of the remaining pool; expected losses on the original pool balance total 4.4%, including $55.7 million (2.7% of the original pool balance) in realized losses to date. Fitch has designated 24 loans (12.8%) as Fitch Loans of Concern, which includes four specially serviced assets (1.9%).

As of the June 2015 distribution date, the pool's aggregate principal balance has been reduced by 55.4% to $933 million from $2.09 billion at issuance. Per the servicer reporting, nine loans (6.2% of the pool) are defeased. Interest shortfalls are currently affecting classes J through Q.

RATING SENSITIVITIES

Rating Outlooks on classes A-4A through E are considered Stable due to increasing credit enhancement and continued paydown. As 91% of the pool is scheduled to mature in 2015, Fitch will monitor the payoff of loans as they reach their maturity dates. Upgrades may occur at the more senior classes as they delever, although adverse selection may be an issue. Downgrades are likely to classes rated below 'B' as losses are realized.

The largest contributor to expected losses is secured by a 71,757 square foot (sf) retail center located in Meza, AZ (1% of the pool). The property has experienced cash flow issues since 2012 from tenant vacancy, with occupancy declining to 72% as of May 2015 from 83% at year-end (YE) 2012. The YE 2014 net operating income (NOI) debt service coverage ratio declined to 0.85x, from 1.27x for both YE 2013 and YE 2012. The loan transferred to special servicing in May 2015 after the borrower provided a letter of imminent default, and is currently under review by the special servicer. The loan remains current as of the June 2015 remittance date.

The next largest contributor to expected losses is secured by a 56,000 sf suburban office property in Fremont, CA (0.6%). Occupancy at the property has fluctuated significantly since issuance, recently improving to 69% as of November 2014 from 48% in 2012, compared to 90% at issuance. The YE 2014 NOI debt service coverage ratio (DSCR) reported at 0.58x, compared to 0.29x as of YE 2013; the property reported negative operating income for YE 2012, with NOI DSCR at -0.13x. According to the servicer the vacant units continue to be advertised. The loan has remained current since issuance.

DUE DILIGENCE USAGE

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

Fitch upgrades the following classes and revised Outlooks as indicated:

--$147.7 million class A-J to 'AAsf' from 'Asf'; Outlook to Stable from Positive;

--$15.5 million class B to 'AAsf' from 'Asf'; Outlook Stable;

--$20.7 million class C to 'Asf' from 'BBBsf'; Outlook Stable;

--$15.5 million class D to 'BBBsf' from 'BBB-sf'; Outlook Stable;

--$28.5 million class E to 'BBsf' from 'Bsf'; Outlook to Stable from Negative;

--$18.1 million class F to 'Bsf' from 'CCCsf'; Assign Stable Outlook.

Fitch affirms the following classes:

--$504.9 million class A-4A at 'AAAsf'; Outlook Stable;

--$130.8 million class A-4B at 'AAAsf'; Outlook Stable;

--$18.1 million class G at 'CCsf'; RE 100%;

--$23.3 million class H at 'Csf'; RE 50%.

--$9.7 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%;

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

--$0 class LF 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 Q certificates. Fitch previously withdrew the rating on the interest-only class X certificates.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Global Structured Finance Rating Criteria (pub. 31 Mar 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864268

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=987002

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=987002

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/20150625006358/en/

Fitch Ratings
Primary Analyst
Benson Thomas
Director
+1-212-908-0645
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Sandro Scenga, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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